Friday, April 7, 2017

JOBS | March Disappoints (Updated Apr 8, 2017)

The 1990s saw steady job growth with Bill
Clinton and in 2009-2016 with Obama.
Sources: BLS, FRED (St Louis Fed).
March 7, 2017—The BLS reported this morning on the March jobs data.

Total nonfarm payroll employment rose by only 98,000 in March, following gains averaging 217,500 in January-February 2017.

Professional and business services continued to grow (+56,000), as did mining (+11,000). These are good-paying jobs:
  • Services to buildings and dwellings (+17,000) and architectural and engineering services (+7,000) did well. 
  • Most of the gain in mining occurred in support activities (+9,000). Mining employment has risen by 35,000 since a recent low in October 2016.
However, retail trade lost jobs (-30,000). Competition from the Internet is likely hurting bricks-and-mortar retailers. Employment in general merchandise stores declined by 35,000 in March and has declined by 89,000 since a recent high in October 2016. The good news is that with higher levels of technology the jobs that remain are better paid.

Health care continues to create jobs, as it has for decades, added 14,000 in March, with gains in hospitals (+9,000) and outpatient care centers (+6,000). In the first 3 months of this year, health care added an average of 20,000 jobs per month, compared with an average monthly gain of 32,000 in 2016.

Financial activities, the best-paying jobs, continued to trend up in March (+9,000) and jobs in the sector have increased by 178,000 over the past 12 months.

Construction employment changed little in March (+6,000), following a gain of 59,000 in February. It has been trending up since late last summer, largely among specialty trade contractors and in residential building.

Postscript (Saturday, Apr 8, 2017)

Neil Irwin in The New York Times today (p. B2) says that "it was a mistake" for Trump to point out the strong growth in jobs in February, because he drew attention to a number that in March didn't work out so well for the new administration.

Irwin goes on to say that payroll jobs are not the best economic indicator...

What? Trump promises more jobs, and he shouldn't focus on the monthly job numbers? I have been working with the job numbers for a long time, and I don't think Irwin is correct in advising the President to shift attention away from them, certainly not at this early stage.

Trump's biggest campaign commitment was to "Jobs, Jobs, Jobs". The number he has to beat is payroll jobs as shown in the chart below. Sure, these numbers are revised periodically, but they are the coin of the realm. BLS collects job numbers from each state based on unemployment insurance filings within each state. If a monthly number is out of line, it gets looked at more carefully. These numbers are well grounded.

Irwin's two alt monthly job numbers, by contrast, are not so well grounded—
  • Yes, the employment/population number is a good way of comparing long-term job-creating performance, because it eliminates issues involved in unemployment questions asked of the survey respondents in each sampled household. ("Who is not working? Have they been recently looking for work?") It is more resistant to survey-question creep. But the denominator, population, is not a reliable number for month-to-month comparisons.
  • No, probably, to Irwin's proposal to pick age groups within the employment/population ratio. It would require tagging each unemployment insurance report with a year of birth and dividing the monthly job change according to age groups. Maybe this could be done—or the numbers could be estimated based on a sample—but will the new information be worth the effort? Might be something for a state government with a strong Unemployment Insurance staff to experiment with.
  • Yes, finally, tracking wages is indeed important. We know that real wages over the long term have been falling in manufacturing as American factories compete with lower-wage supplies in other countries. But the real hourly earnings of private-sector employees is an aggregate of many different private-sector stories and is less useful for measuring the President's progress toward his stated goal than the aggregate job numbers. A rise in wages may simply reflect fewer jobs in a low-paying industry and more jobs in a higher-paying industry. The quarterly census of jobs and wages is conducted only quarterly and is published with a substantial lag that diminishes the value of the numbers. (But better late than never, and better late than inaccurate.)
Related Posts

Phony Numbers? . Job Numbers for Trump to Beat . Economic Hotspots

Job Growth by Month since the post-Glass-Steagall Meltdown of 2008.

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