The headlines for most analyses of this morning’s employment report are probably going to be very negative, with only 88,000 jobs added. The darned thing is, when you drill down into the internals of the report, many of them had a real positive jump, and are at their best levels ever since the onset of the 2008 recession.
Here’s a few items that ought to make you take a bunch of deep breaths:
- The broad U-6 unemployment rate, that includes discouraged workers, fell a full .5% from 14.3% to 13.8%
- the index of aggregate hours worked in the economy also surged .3 from 97.9 to 98.2
- temporary jobs – a leading indicator for jobs overall – increased 20,300
- construction jobs added 18,000
- the number of people unemployed for 5 weeks or less – a better leading indicator than initial jobless claims – fell by 203,000 to 2,464,000. This may be a new post-recession low. If it isn’t, it’s close (I’ll double check this and update). UPDATE: It’s the second best by 11,000. In March 2011, the number was 2,453,000. This is NOT recessionary.
- January’s report was revised up 29,000 to 198,000. February was revised up 32,000 to 268,000. Positive revisions like this happen in recoveries, not at the onset of recessions
- average hourly earnings increased $.01. While the YoY change declined to +1.8%, when we get the CPI for March we are probably going to find that real, inflation adjusted hourly earnings are the most positive in several years
- the average workweek increased .1 to 34.6
- overtime hours increased .1 to 3.4
- the most commonly reported unemployment rate, U-3, also declined to a new post-recession low of 7.6%
- the alternate jobs number contained in the more volatile household survey showed -206,000 jobs lost
- the average manufacturing workweek declined -.1 to 40.8 hours. This is one of the 10 components of the LEI and will affect that number
- manufacturing lost -3000 jobs. This is a leading element of the jobs report
- government shed -7000 jobs
Finally, in what I guess will provoke the most heated debate from this report, almost 500,000 people dropped out of the labour force. This is why the various unemployment measures declined. The employment/population ratio declined to 58.5%, and the labour force participation rate dropped to the lowest level since 1979. How much of that is pessimism by potential employees, and how much is the ever increasing level of Boomer retirements I will leave up to the combatants, but you probably would be right figuring that a lot of both is going on.
Exactly one year ago, we got an employment report that similarly looked awful, with only +120,000 jobs added. By the time the revisions were completed, that number had risen to +205,000. I don’t mean to gloss over the negatives in this report, and I am very concerned as I have been since the beginning of the year about the impact of the payroll tax increase and now of the sequester. But I am going to take a deep breath, because there are simply too many good internals in this report for me to proclaim that we are DOOMED!
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