March 2021 Employment Report

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The Bureau of Labor Statistics’ (BLS) establishment survey showed non-farm employers added 916,000 jobs in March (easily exceeding consensus expectations of +619,000). January and February employment changes were revised up by a combined 156,000 (January: +67,000; February: +89,000). Meanwhile, the unemployment rate (based upon the BLS’s household survey) edged down by 0.2 percentage point (to 6.0%) as the ranks of the employed swelled much faster (+609,000) than the civilian labor force (+347,000). 

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Observations from the employment reports include:

* The establishment (+916,000 jobs) and household surveys (+609,000 employed) were somewhat correlated. 

* Goods-producing industries added 183,000 jobs; service-providers: +733,000. Leisure and Hospitality (+280,000), Government (+136,000), Construction (+110,000) and Education and Health (+101,000) together represented over 68% of total job gains. Manufacturing expanded by 53,000 jobs. That result is consistent with the Institute for Supply Management’s (ISM) manufacturing employment sub-index, which expanded more quickly in March. Wood Products employment rose by 1,400 (ISM was unchanged); Paper and Paper Products: +400 (ISM increased); Construction: +110,000 (ISM not yet published).

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* The number of employment-age persons not in the labor force fell (263,000) to 100.4 million. As a result, the employment-population ratio (EPR) ticked up to 57.8%; i.e., nearly six in 10 of the employment-age population are presently employed. 

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* Because the civilian labor force expanded by 347,000 in March, the labor force participation rate ticked up to 61.5%. Meanwhile, average hourly earnings of all private employees fell by $0.04 to $29.96, resulting in a 4.2% year-over-year increase. For all production and nonsupervisory employees (pictured above), hourly wages rose by $0.02, to $25.21 (+4.4% YoY). Since the average workweek for all employees on private nonfarm payrolls expanded by 0.3 hour, average weekly earnings increased by $7.60, to $1,045.60 (+4.8% YoY). With the consumer price index running at an annual rate of +1.7% in February, whether consumers are keeping up with price inflation depends primarily upon whether or not they are working.

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* Full-time jobs jumped (+935,000) to 125.8 million. Workers employed part time for economic reasons (shown in the graph above) -- e.g., slack work or business conditions, or could find only part-time work -- fell by 262,000, whereas those working part time for non-economic reasons retreated by 203,000; multiple-job holders advanced by 139,000.

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For a “sanity test” of the job numbers, we consult employment withholding taxes published by the U.S. Treasury. Although “noisy” and highly seasonal, the data show the amount withheld in March shot up by $55.3 billion, to a record $286.6 billion (+23.9% MoM; +12.1% YoY). To reduce some of the monthly volatility and determine broader trends, we average the most recent three months of data and estimate a percentage change from the same months in the previous year. The average of the three months ending March was 4.6% above the year-earlier average.

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.