By Thomas Cooley and Peter Rupert
Establishment Survey
The Bureau of Labor Statistics employment report showed that payroll employment increased 916,000 in March, 780,000 of that in the private sector. February’s job growth was also revised upward by nearly 90,00 jobs. All of this seems to foretell a robust recovery of employment in the coming months as the economy open up further. The pre-report estimates were in the ball park of 675,000 according to a Dow Jones poll so this was a happy surprise.. Service producing jobs were up 597,000 jobs as many of the COVID-shuttered sectors have started coming back online. Leisure and hospitality employment grew 280,000. Not all of the gains shown today, however, were COVID-related as warmer weather has also arrived and so to an increase in construction employment, up 110,000.
Before writing home with such good news it is useful to step back and look at the bigger picture…where are we now compared to just before the pandemic hit? In February 2020 employment was 152,523,000. As of today’s report there are 144,120,000: We are still down 8,403,000 jobs or roughly 5.5%. Leisure and hospitality employment was 16,915,000 in February 2020 and is now 13,781,000, about 19% below the pre-pandemic level. The usual interpretation of the monthly jobs report is how many new jobs have been created. Of course it is always the case that some jobs are just hires back into the same job; however, it is a welcome sign to have more and more people getting back to work.
The report showed strength in pretty much every super sector except temporary help services, declining very slightly. The average workweek increased substantially, to 34.9 from 34.6, almost reaching the 35.0 mark set in January, the highest since 2006 when the series for total private workers began from the BLS. Average hourly earnings fell slightly, from $30.00 to $29.96, likely reflecting the fact that many of the workers coming back on line are in sectors with typically lower earnings.
Household Survey
The household survey showed an increase in the labor force of 347,000. The number of people employed jumped 609,000 and number unemployed fell 262,000. The result of these changes decreased the unemployment rate from 6.22% to 6.05%. But labor force participation and the employment population ration continue to be a historically low levels, consistent wth an economic environemnt where many are still sitting on the sidelines.
Initial claims were released on Thursday and had a bit of a hiccup, rising to 719,000 compared to 658,000 the week before. Note, however, that the BLS revised its seasonal adjustments for 2016-2020 with this report.
Long term unemployment, those unemployed 27 weeks or more, continues to rise and the percent of the unemployed who are long term is nearly as high as during the Great Recession and considerable more than at any time since the data started in 1948. This is significant because these are the workers who experience “scarring” as a result of prolonged layoffs and this has implications for productivity in the long run.
So, where can we go from here? It is apparent that people are eager to get back to work and businesses are clamoring to re-open. As we go forward in the recovery from the pandemic we expect employment in the service sectors to rebound relatively quickly. The housing market is booming suggesting construction will likely continue to rise apace. Finally, manufacturing would be recovering even faster except for disruptions to global supply chains. Once these begin to get resolved there will come a little normality…maybe.
