In recent posts, I've noted how the data has presented a mixed message about the economy with the job market indicating a strengthening economy while GDP and other data indicating a more sluggish economy. Today's job market report suggests that previous job market reports were biased upward, probably due to seasonal adjustments and extra warm weather. The report indicated that 120,000 jobs were created in March, down considerably from over 200,000 per month in recent months. In addition, the unemployment rate declined to 8.2%, but this was due to more people leaving the labor force as the household survey (used to estimate the unemployment rate) showed a loss in jobs. A more precise measure of the labor market is hours worked, which declined in March, led by declines in construction and manufacturing.
What sectors led to the relative weakness in the job market? Temp agencies added 55,000 jobs in February, but lost 7500 in March (a difference of 62,500, which accounts for a majority of the decline). The rest of the weakness appears to be spread throughout other sectors, with slowdowns particularly evident in health care and information services.
Are there any positive news from the report? Besides the decline in the unemployment rate, the broad measure of unemployment (U6) declined from 14.9% to 14.5% This was mainly due to a decline in those working part-time for economic reasons. As part-time employment fell, more people were working full time.
Rather than reflecting a significant slowdown in the job market, I think the report indicates limitations in the data, due to seasonal adjustments and unusually warm weather in many parts of the country. As noted elsewhere, it's going to be hard for the job market to improve significantly unless economic growth also strengthens, which is not expected in the near future.
