Jobs are important to the social fabric of a society. Econintersect endeavors to overview the data as it is released – adding perspective and cross-checks to flesh out the big picture.
The picture is always more than the snapshot of the numbers.
This is jobs week. Today, ADP (the largest payroll service provider) – using subset of its 500,000 U.S. business clients and methodology similar to the BLS – released its March 2011 employment data showing 201,000 private non-farm jobs were added. Additionally, global outplacement firm Challenger, Gray & Christmas, Inc released its layoff data.
You might ask yourself how can March jobs be released when March is not over? The answer is that both the BLS and ADP use mid-month cutoffs. This a reason for prior month adjustments – and why you cannot take a one month data point out of context.
Private-sector employment increased by 201,000 from February to March on a seasonally adjusted basis, according to the latest ADP National Employment Report® released today. The estimated change of employment from January 2011 to February 2011 was revised down to 208,000 from the previously reported increase of 217,000.
This month’s ADP National Employment Report removes any remaining doubt that private nonfarm payroll employment accelerated heading into 2011. The increase of 201,000 is in line with the consensus expectation both for today’s report and for Friday’s jobs report from the Bureau of Labor Statistics.
The average monthly increase in employment over the last four months – December through March – has been 211,000, consistent with a gradual if uneven decline in the unemployment rate. This is almost three times the average monthly gain of 74,000 over the preceding four months of August through November.
The historic jobs creator is small business – and ADP’s numbers clearly show this business sector is creating. But a 200,000 monthly jobs growth must be compared against the 130,000 to 150,000 jobs which must be created monthly to account for the growth of the potential labor pool.
And 8 million jobs disappeared in the Great Recession alone which means we are chipping away in the last three months at a rate of less then 50,000 per month.
There is disturbing undercurrents to these “good” employment numbers. Layoffs and downsizing is at 1995 levels according to Challenger. Even with very low layoff rates, jobs are not being created. Further there is a 20,000 jobs headwinds from government layoffs which are NOT in the ADP numbers.
While government-sector job cuts rose to their highest level in 12 months, the pace of downsizing declined in March as employers announced plans to reduce payrolls by 41,528 jobs during the month, down 18 percent from 50,702 job cuts announced in February.
The report on March job-cut announcements released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc. revealed that March job cuts were down 39 percent from a year ago, when employers announced 67,611 job cuts.
Overall, employers have announced 130,749 job cuts through the first quarter, 28 percent fewer than the 181,183 planned layoffs announced in the same period of 2010. The three-month tally is, in fact, the lowest firstquarter total since 1995, when employers announced 97,716 job cuts from January through March.
Once again, the public sector dominated monthly job cuts, accounting for 19,099 or 46 percent of all March layoffs. The 19,099 planned job cuts announced by government and non-profit organizations increased 17 percent from 16,380 in February. It is the highest monthly total for this sector since
March 2010, when it reached 50,604.
If there is any silver lining in the government layoff figures, it is that they are down significantly from a year ago. The March figure is 62 percent lower than a year earlier and the 41,929 job cuts in the sector through the first three months of the year is 33 percent lower than the 62,700 government layoffs announced in the first quarter of 2010.
“Despite the decline from last year, it is difficult to be optimistic about the outlook for governent workers. Most cities and states have only just begun to address their massive budget deficits and we have yet to see how budget cutbacks are going to impact workers at the federal level,” said Rick Cobb, executive vice president of Challenger, Gray & Christmas.
“The good news is that other areas of the economy appear to have stabilized in terms of downsizing activity. The sectors that had the heaviest job losses at this point a year ago have seen significantly fewer layoffs,” said Cobb.
Job cuts in the pharmaceutical industry have fallen 87 percent from 26,165 job cuts a year ago to 3,385 this year. Automotive job cuts, which totaled 7,728 at this point last year, are down 53 percent to 3,668. Job cuts in the telecommunications sector are down 69 percent from 14,795 to 4,552. “The hope is that a few months of even slightly stronger hiring in the private sector will tip the scales toward accelerated job creation. Employers are watching the labor market closely and if it starts to look like the talent pool is getting shallower, then they could be compelled to increase the rate of hiring,” said Cobb.
Econintersect has developed a proprietary employment dynamics gauge which will be be released consistent with this month’s economic forecast. This gauge is currently showing a flat employment picture going forward for the next few months. The ADP numbers came in consistent with this gauge.
But the BLS is an inconsistent metric due to methodology. Over the last three months, the BLS private non-farm payrolls has averaged 150,000 per month in a range between 68,000 to 222,000. Econintersect projects March 2011 private non-farm employment to continue at trend of 150,000.