March employment report: slow but steady improvement

by: Zach Bethune, Thomas Cooley, Peter Rupert

The establishment survey reports total non-farm employment increased 192,000 with all of it attributed to the private sector as the government sector showed no change over the month. Evidently, after two cold months depressed the labor market, employment gains look much as they have over the past twelve months or so, averaging 184,000 since February, 2013. empchgm-2014-04-04 Total employment is now near its level of December, 2007, just when the economy went into recession; and, private employment is slightly above its pre-recession peak. emp-2014-04-04
Average weekly hours in the private sector also jumped up from 34.3 to 34.5.



On the household side, both the number of unemployed (10.5 million) and the unemployment rate  (6.7%) remained essentially unchanged and have both moved little during 2014. The progress of the labor markets now seems highly dependent on the prospects for the long-term unemployed. Average unemployment duration remains remarkably high while initial claims have returned to pre-recession levels. The long term effects of the large number of long-term unemployed is a story that is yet to be told.  But, all of the initial research point to large permanent losses in income and mobility.

The household survey also revealed that labor force participation has begun to inch up, a sign that prospective workers see more opportunities than they have.





As can be seen in the Beveridge Curve below, the number of job openings has nearly returned to its level in January, 2008, though the success of the labor market in filling those vacancies has not kept pace…but is continuing its “counter-clockwise” loop as per usual.

In the end, then, what is the take-home message? The overall picture, while not stellar, shows a broad array of data that is mostly positive, but is it enough to change the pace or magnitude of Fed policy…seems unlikely for now.

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