Already a Bloomberg.com user?
Sign in with the same account.
Goldman Sachs Group Inc/The
The government reported today that the economy added just 120,000 jobs in March, below market expectations, while the unemployment rate fell a notch to 8.2 percent from 8.3 percent in February. Economists surveyed by Bloomberg News had a median forecast of 205,000 jobs added, so the March report was a mild disappointment. “Mild” because it’s not even clear that the economists were wrong. The government’s count is imprecise, and the economists’ estimate was within its margin of error.
Goldman Sachs (GS) economist Jan Hatzius called the report “notably weaker than expected,” pointing out that temporary employment, which is a sensitive indicator of the job market’s strength, fell in March for the first time in nine months (albeit by just 7,500 jobs). Labor Secretary Hilda Solis accentuated the positive: “Some months we are seeing tremendous job gains, while other months we are seeing more modest gains. But the trend line is clear: Our economy is growing, and our recovery is durable.”
More disappointing was the decline of 164,000 people in the labor force, which is the number of people either working or actively looking for work. That declines when unemployed people get discouraged and stop looking for a job. Those who aren’t looking aren’t counted as unemployed, which explains the small drop in the jobless rate.
Still, there’s a lot more to the jobs report than the headline statistics and the political spinning. Here are some other key data points:
Share of the working-age population with jobs
The share of working-age people who have jobs–a better measure of labor slack–plummeted from 63 percent before the recession to below 59 percent, and has been stuck there since. It was 58.6 percent in February. In March it fell to 58.5 percent, staying range-bound.
The longer you’re out of work, the worse the damage to household finances, not to mention spouses, children, self-esteem, and even employability. The average duration of unemployment spells rose from around 17 weeks before the recession to over 40 weeks in 2011. It was exactly 40 weeks in February. In March it fell to 39.4 weeks.
There’s a lot of cheering about the return of manufacturing jobs, but keep things in perspective. Employment in manufacturing fell one-third from over 17 million in 2000 to about 11.5 million in 2009. It rebounded to 11.9 million in February. In March manufacturing gained 37,000 jobs, in line with the recent trend.
Contrary to pump-priming theory, government isn’t picking up the hiring slack from the private sector. In fact, excluding a Census jobs bump in the spring of 2010, government employment has been falling since 2009. It was 22.675 million in April 2009 and 21.986 million in February, a decline of nearly 700,000. In March it declined just 1,000.
At least the people who had jobs got paid a little better. In March, average hourly earnings for all employees on private nonfarm payrolls rose by 5 cents, or 0.2 percent, to $23.39. But that’s barely enough to keep up with inflation. Over the 12 months through March, average hourly earnings have increased by 2.1 percent, which is below the 2.9 percent increase in prices in the 12 months through February.