March 2015 Employment Report

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According to the Bureau of Labor Statistics’ (BLS) establishment survey, non-farm payroll employment increased by 126,000 jobs in March -- only about half the expected 247,000. Moreover, combined January and February employment gains were revised downward by 69,000. Meanwhile, the unemployment rate (based upon the BLS’s household survey) remained stable at 5.5% -- more a result of individuals dropping out of the workforce (277,000) than workers finding jobs (34,000). 

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Observations from the employment report include:

* The disparity in jobs gains between the establishment (+126,000) and household (+34,000) surveys was noticeable again in March.

* The downturn in oil-sector (part of the Mining & Logging category) employment continued in this report.

* Roughly 70% (91,000) of private-sector job growth occurred in the three super-sectors typically associated with the lowest-paid jobs: Profession & Business Services; Education & Health Services, and Leisure & Hospitality.

* The ongoing narrowing in the number of Manufacturing versus Food Service & Drinking Places (FS&DP) jobs continued in March. Interestingly, in January 2000, there were 9.168 million more U.S. manufacturing jobs than FS&DP jobs. As of March 2015, the gap has shrunk to 1.302 million. Although the number of manufacturing jobs was 188,000 higher than March 2014, the concurrent growth rate in FS&DP jobs was more than double that (+415,100). 

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* The employment-population ratio was stable at 59.3%, but the number of employment-age persons not in the labor force jumped 277,000 to a new record of 93.2 million. 

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* The labor force participation rate ticked lower by 0.1 percentage point, tying its multi-decade low of 62.7%. Average hourly earnings of all private employees rose up by $0.07, resulting in a 2.1% year-over-year increase. For all production and nonsupervisory employees (pictured above), hourly wages rose $0.04 (+1.8% YOY). With the CPI running at an official annual rate of 0.0%, wages are technically rising in real (inflation-adjusted) terms. The amount of time people worked each week, meanwhile, slipped 0.1 hours to 34.5 hours after hovering at a post-recession high for months. 

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* Finally, full-time jobs increased (+190,000) while part-time jobs fell (-170,000). Full-time jobs have been trending higher since December 2009, but are still 851,000 short of the pre-recession high. Part-time jobs, by contrast, have been stuck in a channel between roughly 27 and 28 million.

New York Post columnist John Crudele is the latest to expose the methodological problems that underlie the employment reports. Those issues include “rogue” seasonal adjustments that make the numbers look stronger, to outright lying and data fabrication. Crudele’s advice: Take the employment report with a “giant grain of salt” because it is “unreliable to the point of being nearly useless at best and fraudulent at worst.” Unfortunately, it is the best information available.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.