Looking Forward Into BLS Jobs Numbers

Econintersect will never be the first out with analysis of jobs data. It takes time to go through the statistics and make some sense of the data. Looking at jobs data is a backwards view of the economy, and what should be important is the direction we are going.

A quick look at the jobs picture from the Bureau of Labor Statistics (BLS) for March 2011:

Nonfarm payroll employment increased by 216,000 in March, and the unemployment rate was little changed at 8.8 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, leisure and hospitality, and mining. Employment in manufacturing continued to trend up.

Going deeper into the data:

  • In the latest BLS report employment-population ratio edged up slightly from 58.4% to 58.5% and the labor force participation rate remains constant at 64.2%).  These ratios tell you that the percent of the population unemployed did not change.  What is important to note going forward is that the government itself does not expect a significant recovery in these numbers.  The following graph is from a CBO study.The main reason is the aging of the population.
  • Econintersect does not like the BLS methodology of determining unemployment – only participation rates or employment-populations ratios tell you what is really going on with unemployment.  But for those who like to read this the headline U-3 unemployment rate fell slightly from 8.9% to 8.8%.  The all in U-6 unemployment rate fell from 15.9% to 15.7%.
  • Average hours worked improved slightly from 34.2 to 34.3 – a rising number indicates an expanding economy.
  • The Federal Government’s employment levels rose 1,000, but state and local government employment fell 15,000.  Many of these could have reappeared in private sector employment as outsourcing.
  • Retail trade employment rose almost 18,000 after falling 8100 last month.  The transport sector fell slightly (100) and the support services industry (including temporary help) rose 36,000.  Econintersect believes the transport sector is a forward indicator implying the future is flat jobs growth.  Others look at temporary help as a forward indicator.
  • The big gains were in private education and leisure services.
  • A nice gain in manufacturing of 17,000 but down from 33,000 last month.
  • The unemployment rate for people between 20 and 24 fell from 15.4% to 15.0%.  Econintersect did an analysis on university unemployment which is worth a read (analysis here).

Econintersect believes the rate of jobs growth will not significantly change going forward as the economic pressure needed for higher jobs growth has subsided (analysis here).

Earlier this week, ADP released its jobs report (analysis here).  Econintersect tries to correlate jobs data as the BLS uses controversial methodology – and likely the truth is in blending both of these data points.  However, this month both are saying the same.

In summary, the data suggests future jobs growth at the same levels as the last two months.

Related Article

Good Jobs Report – Employment Trends are Up  by John Lounsbury and Steven Hansen