Economic Recovery – A snapshot (4/1/11)

 March jobs number is out, showing a gain of 216,000 jobs for the month and an unemployment rate of 8.8 percent, unchanged for the previous month. A few takeaways.

First, the conservative jobs recovery continues. Jobs are being created in spite of government hiring, not because of it. The private sector is finally creating jobs at an acceptable pace: 230,000 jobs in March, after 240,000 in February. The notion that deficits crowd out private sector investment and hiring just isn’t true. There are 1.656 million more people with private sector payroll jobs today than there were a year ago.   But state and local austerity is taking a toll on employment.  The government cut 14,000 jobs in March, after cutting 46,000 in February, with almost all the cuts coming from local government. Overall, government employment is off 356,000 in the past year. One note: in a departure from the recent trend, the job numbers for January and February were revised upward by only the tiniest of margins.

Second, whereas the early stages of this expansion were driven almost exclusively by exports and business, now a mix of domestic consumer demand and global growth/business recovery are fueling job creation. A look inside the numbers show that the mining sector added 14,000 jobs, manufacturing added 17,000 jobs, while professional and business services added 78,000 jobs. That’s not surprising, given the continuing rise in exports, high commodity prices and the general health of the corporate sector.  But some areas that had been decimated by weak consumer demand showed some gains, as the sustained rise in retail sales and consumer spending is finally translating into hiring. Retail trade added nearly 18,000 jobs, and the leisure and hospitality sector added 40,000 jobs in March.

Third, signs of distress and slack still abound. The size of the work force actually grew in March, for the second straight month, which is why the unemployment rate didn’t fall. But the labor force participation rate was unchanged, and the employment-population rate, which is perhaps the most telling piece of data on the health of the overall job market, remained at a low 58.5 percent. As a result, this labor market remains very much a buyers’ one. The combination of perpetually weakening unions, government austerity measures, and the high level of slack means workers have a very tough time getting getting higher wages. In March, average hourly earnings and average weekly earnings in the private sector were unchanged.

The good news is that the two huge jolts of instability that hit the global economy in March — continuing unrest in the Middle East and the tsunami/nuclear disaster in Japan — didn’t derail job growth in the U.S. Companies continued to hire as they experienced greater demand from consumers and businesses at home and abroad. The big question is whether companies will continue to hire as these forces continue to act as headwinds in April. We’ll found out on the first Friday of May.

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