The BLS reported that 236,000 jobs were added in March. Like December and January, the household survey significantly beat the headline report with 577,000 jobs added. The household survey was surprisingly strong given the current economic environment.
Figure: 1 Primary report against household survey – monthly
Three months into the year, the Household Survey actually topped the headline report by the largest margin ever. As of March, the total number of jobs reported by the Household Survey was 60% higher than the main report. The next biggest year was 2018, when the Household Survey was 27.5% higher.
The BLS also publishes the data behind its birth/death assumptions. These are the jobs that the BLS assumes based on companies starting or closing. Although the data is not seasonally adjusted, it has a direct impact on the main report. The chart below shows the impact of birth/death jobs on the total over the last few months.
March was a very modest number with a loss of 29k jobs due to the birth/death pattern. This is only the fourth negative month since March last year.
Figure: 3 Primary unadjusted report of birth death assumptions – monthly
On a year-over-year basis, the number is almost exactly flat year over year with only 3,000 jobs added as a result of birth/death assumptions.
Figure: 4 Primary unadjusted report of birth death assumptions – per year
Digging into the report
The 236,000 jobs added was the smallest report since December 2020. It was enough to lower the official unemployment rate to 3.5%, after rising to 3.6% last month. The labor force participation rate also rose to 62.6%, the highest level since March 2020, just as Covid hit the labor market.
Figure: 5 Change by sector
The number of workers with multiple jobs increased by 75,000 in March to 7.98 million and now make up 5% of the labor force. That means 31.8% of the current jobs report is due to people getting second jobs!
Figure: 6 Multiple full-time employees
Full-time workers also saw a modest increase, rising by 7,000 to 395,000. The current number is still slightly below the all-time peak seen last August.
Figure: 7 Multiple full-time employees
The March report is usually revised downward when seasonal adjustments are made. However, this March saw the smallest seasonal adjustment since at least 2010. A seasonal adjustment closer to the historical norm would make the current report significantly worse.
Figure: 8 Adjusted vs. Unadjusted on a yearly basis
Breakdown of adjusted numbers
Comparing the current month to the 12-month trend shows that this month there were 7 out of 8 months that were below the 12-month trend. This suggests that the labor market is definitely slowing down.
Figure: 9 Current versus TTM
The table below shows a detailed breakdown of the numbers.
- Three categories are actually negative for the month
- The government is responsible for 47 thousand of 236 thousand jobs (20%)
- Over the past three months, financial services have decreased by 1k and technology (information) has decreased by 9k
The fact that technology only showed a decline of 9k jobs is quite surprising. Multiple tech firms have announced major layoffs, totaling more than 9,000. Also, very few tech companies are hiring. It’s possible seasonal adjustments explain some of the difference, but more likely it’s the BLS underestimating the true state of the economy right now.
Figure: 10 Labor market details
While the title number gets all the attention, the number is usually revised several times. Over the past three months (excluding the current month), jobs have been revised down by an average of 4.7 thousand. This means the actual jobs report is weaker than originally reported.
Figure: 11 revisions
The chart below shows data from 1955. As shown, the economy is currently “enjoying” the lowest unemployment rate in history. This is quite hard to believe given the current economic environment and the job losses that have been announced and implemented.
Figure: 12 Historical labor market
The labor force participation rate hit a post-pandemic peak of 62.6%, but is below 63.3% in February 2020 and well below 66% since before the financial crisis.
Figure: 13 Distribution of the labor market
Since the market was closed, we won’t know how the stock market will react to the job market until Monday. The report was largely in line with expectations. Average hourly earnings rose 9 cents in March, or 3.3% year over year, down from 4.4% in October 2022.
Unfortunately for workers, their wage increases have not kept pace with inflation. This means that the majority of the workforce is actually taking a pay cut, which is usually not a sign of a healthy labor market. The job market has defied logic in the past year. The economy has few signs that it is slowing, if not already in recession. The yield curve has inverted, money supply growth has collapsed, companies continue to announce layoffs, and more.
The Federal Reserve has its head in the sand, assuming that their higher interest rates will not completely destroy the bubble economy created by its cheap money. Even after SVB’s collapse, the Fed ignored signs of an economy on the brink. It’s only a matter of time before something else breaks, and something much bigger than SVB. When that happens, the number of jobs will most likely turn deeply negative and the Fed will be forced to launch easy money policies to try to “save” the economy. Gold and silver appear to be leading the way, continuing to show strength even amid hawkish comments from the Fed.
Data source: https://fred.stlouisfed.org/series/PAYEMS and also CIVPART series
Data is updated: Monthly on the first Friday of the month
Last updated: March 2023
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