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A Lukewarm U.S. Labor Market Report for March

0 99 Economic

by Alex Carrick

March's Employment Situation report from the Bureau of Labor Statistics (BLS) served up mainly lukewarm data. The total number of jobs in the nation rose by 126,000, but that was less than half the increase realized the month before.
A Lukewarm U.S. Labor Market Report for March

February's net gain had been 264,000 and the average month-to-month increase during the 12 months prior to this March was 269,000.

There's a good chance the latest numbers are simply displaying a temporary pause and that they'll advance more quickly again in April. The most recent initial jobless claims report, for the week ending March 28, points in that direction. It recorded a level of only 268,000, which is about as low as this figure ever drops.

The unemployment rate was steady at 5.5%. The number of individuals designated as 'long-term unemployed' − meaning that they've been without work for 27 straight weeks or more − stayed the same as in February, at 2.6 million. But year over year, their number has fallen by 1.1 million.

The number of jobs in both construction and manufacturing stayed virtually unchanged in March. The unemployment rate in construction now sits at 9.5%. In the same month of last year, it was 11.3%.

Manufacturing's jobless rate has improved to 4.8% at present versus 5.4% a year ago.

The lowest unemployment rates among major sub-categories are in financial services, 2.6% versus 4.2% a year ago, and government, 2.4% compared with 3.2% in March of last year.

There was only one major industrial sub-category in which the unemployment rate was higher in March of this year than in the same month of last year.

That deterioration, from 8.0% to 5.3%, was recorded in 'mining, quarrying and oil and gas extraction'. Given the steep slide in the international price of oil which has caused many drilling projects to be put on hold, the only surprise is that the job cuts so far haven't been more severe.

In fact, while 'support activities for mining' recorded a payroll reduction of 11,000, the specific 'oil and gas extraction' category was unchanged in the month. It seems almost certain there will be more significant employment blows coming in this corner of the resource sector.

Stock market investors may be in doubt as to how they should react to the latest labor market data. There will be some worry that it may indicate an economy that has lost some of the spring in its step.

At the same time, though, it takes pressure off the Federal Reserve to raise interest rates. The likelihood of a first-strike hike in rates at the beginning of this coming summer may have slipped in favor of the early fall.

In the past, equity prices have benefitted each time the prospects of a climb in yields has been delayed.

The Fed itself may be of two minds about the latest uncertainty as to timing, knowing that when it does raise rates, it will lend further upward impetus to the value of the U.S. dollar. A higher-valued greenback is a hindrance to American firms attempting to make export sales.

With respect to U.S. total employment, the year-over-year percentage change has risen to a quite respectable +2.3%. That falls within the historically 'normal' range of +2.0% to +2.5%.

On the same basis, 'construction' (+4.7% year over year) is the leader among major sub-sectors, followed by 'transportation and warehousing' (+3.6%); 'professional and business services' (+3.5%); 'leisure and hospitality' (+3.4%); and 'education and health' (+2.5%).

The number of jobs tied to 'financial activities' (+1.9%) has picked up momentum, as the banking community has finally moved on from the nightmares it experienced during the credit crunch of the Great Recession.

Retail employment is +2.1% year over year and the nominal number of workers receiving pay checks from shopkeepers has finally reached and slightly exceeded what it was in 2007, before the big downturn.

This sector is continuing to encounter headwinds, however, as several long-time stalwarts are either calling it quits (Radio Shack) or planning to downsize staff (Target).

Manufacturing employment in America may be up only 1.5% year over year in total, but the motor vehicle and parts segment deserves accolades for its 5.5% job-creation performance.

Hiring in the public sector (+0.3% year over year) continued to languish. In March, there was a net decline of 3,000 government workers, comprised of -2,000 and -4,000 at the federal and state levels respectively, but +4,000 locally.

Finally, there are four profession-specific designations that I always like to keep an eye on. Due to the wide-ranging contributions employees in these walks of like make across many sectors, they serve as bellwether indicators for the total economy.

Employment in 'accounting and bookkeeping' services is now +5.7% year over year, a strong rate of advance.

'Computer and design services' lays claim to an also admirable 4.6% gain.

'Architectural and engineering' services has achieved a 3.8% rise, which is positive for future on-site construction work, as plans and blueprints naturally evolve into actual physical projects.

The 'legal services' category continues to struggle at -0.2%.

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