U.S. Jobs: March Report Narrows Unemployment Gap

Despite Russia's brutal invasion of Ukraine and its substantial follow-on economic shocks, U.S. job growth continues to pop, and unemployment continues to shrink. As a consequence of adding 431,000 jobs for March across numerous sectors, the first-quarter 2022 monthly job growth average of 562,000 matches the monthly growth rate for all of 2021.

That said, employment is still down by 1.6 million positions (essentially 1 percent) from its pre-pandemic number in February 2020. That number continues to shrink as well, however and with only a single percent left to recover to reach pre-pandemic parity, we can see the light at the end of the tunnel. Finally!

Household Survey Weighs In, Too

This is one of the months when the U.S. Bureau of Labor Statistics report also includes household survey data. It, too, shows improvement more or less across the board. Here are some highlights:

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- Permanent job losers dropped by 191,000 to 1.4 million, only slightly higher than the February 2020 figure of 1.3 million.

- Persons on temporary layoff registered at 787,000, nearly identical to February 2020 numbers.

- Job leavers — those who quit or voluntary left their positions and began looking for new work — dropped by 176,000 to 787,000 for March.

- Long-term unemployed (jobless for 27 weeks or more) fell by 274,000 to 1.4 million. This is 307,000 above February 2020 levels.

- Labor force participation rate stands at 62.4 percent, relatively unchanged since February 2022. But the employment-population ratio added 0.2 percent to 60.1 percent. These are still below February 2020’s numbers (63.4 percent and 61.2 percent, in the same order) — but again the gap is narrowing and nearly matches the "last one percent" observed for overall unemployment earlier.

- The number of those employed part time "for economic reasons" stands at 4.2 million, and nearly matches its February 2020 counterpart. According to the U.S. BLS, such persons "would have preferred full-time employment, [but] were working part time because their hours had been reduced or there were unable to find full-time jobs."

- The count of individuals not currently in the labor force who currently would like to be employed increased by 382,000 to 5.7 million for March. This reverses the change in this number for March, and exceeds the February 2020 number (5.0 million). Such persons don’t count as unemployed because they did not actively seek work in the four weeks prior to the survey, or were otherwise unable to take on a job during that period.

- Those marginally attached to the labor force — individuals who wanted work, were available to take a job, and had looked for a job during the previous 12-month period, but not in the four weeks preceding the survey — register at 1.4 million for March. This number is little changed. Within this number, those workers who believed no jobs were there for them (called "discouraged workers") came in at 373,000 persons.

Overall, these numbers show almost universal improvement, and a continuing return to (or surpassing of) February 2020 levels. This represents strong fundamentals, and broadly signals improvement and grounds for higher expectations in the months to come.

Assessing the Usual: The Establishment Survey Data

A constant feature of the Bureau’s monthly reports, this segment reports growth by job market sectors. The 431,000 job gain for March was broad, and the numbers for January and February, already pretty substantial, were revised upwards, too. January got another bump from 481,000 to 504,000 (+23,000 jobs), while February advanced from 678,000 to 750,000 (the highest month in recent memory, +72,000 jobs).

It puts March into interesting perspective because, while substantial, the 431,000 gain for that month is 14.5 percent below January, and 42 percent below February. I’m hoping this means the first two months of the year were welcome upward blips, rather than indicating the end of higher-level job growth levels, with March representing a new and lower normal level for 2022.

Given that February exceeded January by nearly 50 percent month-over-month, and that March saw the onset of hostilities in Ukraine and some of the following economic fallout, I’m hopeful this doesn’t mark the onset of a new and downward trend. As usual, time will tell.

Here's how March growth shook out across the job market sectors that the U.S. BLS routinely tracks:

Leisure and hospitality added 112,000 jobs, with 61,000 in food services and drinking places, and another 25,000 in accommodation. This sector has been incredibly volatile throughout the pandemic, and remains 8.7 percent below its February 2020 levels (down by 1.5 million jobs).

Professional and business services added 102,000 jobs, spread broadly across subsectors: services to buildings and dwellings (+22,000), accounting and bookkeeping services (+18,000), management and technical consulting services (+15,000), computer systems design and related services (+12,000), and scientific research and development services (+5,000). Overall this sector is up by 723,000 jobs vis-à-vis February 2020.

Retail trade grew by 49,000 jobs, with 20,000 for general merchandise stores, and another 18,000 for food and beverage stores. A 5,000 loss in health and personal care stores somewhat offset this gain. Retail employment levels exceed those for February 2020 by 278,000 jobs.

Manufacturing jobs increased by 28,000 jobs, with durable goods industries up by 22,000, transportation equipment by 11,000, and electrical equipment and appliances by 4,000, offset by a loss of 5,000 jobs in nonmetallic mineral products. On the nondurable goods side, 16,000 jobs were added, 7,000 of those going to chemicals operations. Vis-à-vis February 2020, employment in this sector is down by 128,000 jobs (1 percent).

Social assistance grew by 25,000 jobs, mostly in individual and family services (+18,000). In this sector, employment is down by 126,000 jobs (2.9 percent) from February 2020 levels.

Construction continued an upward climb, with 19,000 jobs added. It is now on par with February 2020 numbers.

Financial activities added 16,000 jobs, with real estate, rental and leasing up by 14,000, and securities, commodity contracts, and investments up 5,000 (minor losses elsewhere offset some of those gains). That said, employment in this sector is 41,000 higher than February 2020 levels.

Healthcare employment showed a modest increased of 8,000 jobs, after a bigger jump in February. Employment in this sector remains down by 298,000 jobs (1.8 percent) vis-à-vis February 2020.

Transportation and warehousing lost 1,000 jobs, after substantial growth in January and February. In this sector employment is 608,000 higher (4.2 percent) than February 2020 levels.

The remaining tracked sectors — namely, mining, wholesale trade, our home sector of information, other services, and government — were little changed for March. Please note that five of nine of these reported sectors show employment at or over February 2020 levels. That’s an encouraging sign of real recovery.

The Wage Situation

Inflation continues to set new recent records what with increasing gas prices and all that follows in that wake. Thus wages are climbing to try to keep up: the average hourly wage was up by $0.13 for March, at $31.72 for employees on private nonfarm payrolls. Over the past 12-month period average hourly earnings are up by 5.6 percent, or about $1.78.

Alas, for February of 2022, the inflation rate was at 7.9 percent (that’s the most recent month for which such data is available). That means workers are making more, but not enough more to stay ahead of inflation. This will make the wage front interesting to watch — and ponder — in the months ahead.

The Net-Net

Overall, the job market looks surprisingly strong, and shows signs of further strengthening and continuing growth. We must hope that the impact of the Ukraine conflict does not exert enough drag on the global economy to negate those signs. Stay tuned, and I’ll keep you posted.