Klaus Vedfelt
And wages rose at a good clip too.
It was the kind of jobs report we’d expect from an economy that is plugging along just fine, at growth rates that are above the long-run average, powered by consumers outspending inflation with gusto, especially on services, the government spending trillions it borrows hand-over-fist, and businesses that are raking in big-fat inflation-fueled profits.
In March, 303,000 payroll jobs were created – excluding farm workers and the self-employed – by nonfarm employers, which was somehow a lot “better than expected,” after 270,000 jobs had been added in February, and 256,000 in January, according to the “Establishment” survey data by the Bureau of Labor Statistics today.
January’s data was revised up by 27,000 jobs, February’s was revised down by 5,000, for a net up-revision of 22,000 jobs. This brought the three-month average increases, which iron out the month-to-month squiggles, to 276,000 jobs, a rate of over 3 million jobs a year, which is a lot:
Folks can quibble with some of the details, but overall, it was fine – it has been fine every month for well over a year, exactly what you’d expect from an economy that’s plugging right along at a pace that is faster than we’ve come accustomed to over the past 15 years.
There is nothing in this jobs report – and we’ll get into the details in a moment – that indicates that the Fed should cut rates. The job market remains tight, wages are increasing at a good clip, and employment is growing at such a pace that inflation pressures emanate from it.
For the past 12 months, despite the interest rates that the Fed jacked up to 5.25%, nearly 3 million nonfarm payroll jobs have been added. Over the past three months, the pace accelerated to 3.3 million jobs a year annualized. The total number of payroll jobs rose to a record 158.1 million:
Average hourly earnings rose in March at an annualized rate of 4.3%, also according to the survey of employers, to $34.69. Over the past three months – which irons out the month-to-month squiggles – average hourly earnings rose by 4.1% annualized:
Household data of the jobs report messed up by underestimated immigration.
The remaining parts of the jobs report are based on the BLS survey of households. The BLS applies the survey data to the overall population count in the US to come up with its figures of employment, unemployment, the labor force, labor force participation, unemployment rates, etc. The BLS uses the population data from the Census Bureau. But the Census Bureau’s formula has massively underestimated the recent historic surge in immigration.
The Congressional Budget Office, however, has picked up on the massive surge of immigration, and its population growth data for 2022 and 2023 have shot far above the Census Bureau data. We discussed this the other day in detail and how it messes with the BLS household employment data. These are the two diverging population growth estimates:
As a result of applying the survey data to the underestimated population count from the Census Bureau, the BLS understates total employment and the labor force which messes with all the other data. So it’s in this light that we need to look at the stuff below.
Nevertheless, here we sally forth into the Household survey data.
Growth in overall employment, which includes farm workers and the self-employed, per the survey of households and applied to the Census Bureau’s underestimated population count, rose by 498,000 after three months in a row of declines, to 161.5 million.
Given that this metric includes farm workers and the self-employed (and the payrolls data from employers does not), there is always a big difference between the total number of workers per household survey (red) and the workers on employers’ payrolls (blue). But that difference has dropped by half, due to the underestimation of immigration in the Census Bureau population data:
The labor force – also understated by the underestimated population count – rose by 469,000 in March to 167.9 million. The labor force consists of people who are working and those who are not working but actively looking for work.
The fact that the labor force has been dropping in recent months, despite the huge influx of immigrants who are looking for work or are already working demonstrates the impact on the data of the Census Bureau’s undercount of immigration:
The prime-age labor participation rate – people between 24 and 54 – has remained in the same two-decade-high range, at 83.4%:
The number of unemployed fell by 29,000 in March, after a big increase in the prior month (blue). The three-month moving average, which irons out those month-to-month squiggles, ticked up for the second month in a row, after three months of declines (red).
The unemployment rates – the BLS offers six unemployment rates – ranged from 1.3% for U-1, the narrowest definition, to 7.3%, the broadest definition.
U-3 is the official unemployment rate cited in the headlines (red in the chart below):
- 1.3% for U-1: persons unemployed 15 weeks or longer, % of civilian labor force
- 1.8% for U-2: job losers and persons who completed temporary jobs, % of civilian labor force
- 3.8% for U-3: total unemployed, % of civilian labor force (official unemployment rate)
- 4.0% for U-4, total unemployed plus discouraged workers, % of civilian labor force plus discouraged workers
- 4.7% for U-5: total unemployed, plus discouraged workers, plus all other marginally attached workers, % of civilian labor force plus all marginally attached workers
- 7.3% U-6: total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, % of civilian labor force plus all marginally attached workers.
Part-time workers as percent of total workers had hit historic lows during the labor shortages in 2021 and 2022 but have since then risen, and remain very low historically, at 17.4% (three-month average):
Self-employed workers as percent of total workers have remained in the normal range, having come up from the historic low during the labor shortages:
Multiple job holders as percent of total workers have dipped in recent months and remain in the normal range over the past 20 years, but are much lower than in the 1990s and early 2000s:
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
