March 2022 Employment Report

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The Bureau of Labor Statistics‘ (BLS) establishment survey showed non-farm employers added 431,000 jobs in March, short of the 490,000 expected. However, January and February employment changes were revised up by a combined 95,000 (January: +23,000; February: +72,000). Meanwhile, the unemployment rate (based upon the BLS’s household survey) declined further (-0.2%) to 3.6%, as the number of unemployed fell (-318,000) despite an acceleration in the number of (re)entrants to the civilian labor force (+418,000). 

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Observations from the employment reports include:

* The correspondence between the establishment (+431,000 jobs) and household surveys (+736,000 employed) deteriorated somewhat, but at least were directionally consistent.

* Goods-producing industries added 60,000 jobs; service-providers: +371,000. Job gains continued in leisure and hospitality (+112,000), professional and business services (+102,000), and retail trade (+49,000). The only sector showing a significant job loss was state government (-14,000).

Manufacturing added 38,000 jobs. That result agrees with the change in the Institute for Supply Management’s (ISM) manufacturing employment sub-index, which expanded more quickly in March. Wood products employment rose by 2,000 (ISM declined); paper and paper Products: -700 (ISM rose); construction: +60,000 (ISM not yet published at the time of this writing).

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* The number of employment-age persons not in the labor force declined (-298,000) to 99.0 million; that level is 4.0 million higher than in February 2020. With the labor force expanding, the employment-population ratio (EPR) edged up to 60.1%, another pandemic high; even so, the EPR is 1.1PP below the February 2020 level. 

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* Because the civilian labor force expanded by 418,000 in March, the labor force participation rate rose fractionally to 62.4%. Average hourly earnings of all private employees increased by $0.13 (to $31.73), and the year-over-year increase accelerated to +5.6%. For all production and nonsupervisory employees (shown above), the tale was a bit better: hourly wages rose by $0.11, to $27.06 (+6.7% YoY). Since the average workweek for all employees on private nonfarm payrolls shrank by 0.1 hour, to 34.6 hours, average weekly earnings rose (+$1.34) to $1,097.86 (+4.6% YoY). With the consumer price index running at an annual rate of +7.9% in February, the average worker keeps losing purchasing power.

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* Full-time jobs jumped (+912,000) to 132.7 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 -- advanced by 35,000, along with those working part time for non-economic reasons (+203,000); multiple-job holders retreated by 61,000.

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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 increased by $46.2 billion, to $304.3 billion (+17.9% MoM; +6.2% 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 12.4% 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.