This morning the Labor Department reported net new jobs creation of 192K, about 3K below what economists were expecting. The market was generally unimpressed with the in-line jobs number, staying generally flat for the first few hours of trading before souring later in the day.
Although the jobs number was close to what the market expected, was the market looking at the wrong number?
Jobs number: Most quoted economic indicator
The headline seasonally adjusted employer survey jobs number is the most quoted economic indicator in all markets, but perhaps the market should have been looking at the “Employed Part-time for Economic Reasons” figure instead. This sub-component of the labor market report is likely more telling than the total jobs figure.
Why is Employed Part-time for Economic Reasons more telling? Because it distinguishes between a job and a decent job. Decent jobs are what materialize when the economy is really on a good footing.
Here’s what the Employed Part-time for Economic Reasons figure looks like.
The year label represents the year in which a downturn started. The vertical axis is the percentage change in employment from peak. The horizontal axis represents the number of months since peak.
As is likely no surprise, the number of individuals working part-time for economic reasons is still quite high, 51% above where it was in January 2008.
What’s more worrisome is the deterioration this month, jumping +225 from the prior month. When one takes the +225 part-time jobs less the +192 headline jobs figure, it’s -33K.
Although there’s statistical error, the -33K is a reasonable estimate of full-time jobs created during March. Not a good number.
The remainder of this article is a summary on the jobs picture.
The labor market overall is now only about 351K away from its all-time high of 138.365 million in January 2008. That’s 74 months of trending improvement.
Interestingly, if the year is 1997, then the jobs market has another 54 months (4.5 years) to go before another downturn.
In contrast, if it’s 2007, then there’s only 10 more months until the U.S. start losing jobs again.
If it’s the mid-1970s, prior to the hyperinflation period, then there’s only 9 months until jobs deterioration.
Labor market recoveries
The following figures provide a look at the labor market recoveries/booms by industry. As a note, the peak year is defined by the economy as a whole, not the specific peak year for the given industry.
- Financial employment is still suffering from Basel III and Dodd-Frank, with employment in the industry still 4% below where it stood in January 2008. Still 4% below where it was in Jan. 2008 (page 4)
- Construction employment, the industry which saw the largest jobs-shedding, is still 20% below its January 2008 figure.
- Government employment, the industry that needs to shed jobs, is 3% below its January 2008 value.
- Information (Software and Technology) was also hard hit, and is still 12% below its January 2008 figure.
- Manufacturing, also hard hit, is, akin to Information Technology, about 12% below its January 2008 count.
- Natural Resource, which encompasses mining and oil and natural gas production, is about 16% below its January 2008 figure.
- Trade, Transportation, and Utilities is 2% below where employment was in January 2008.
- Retail Trade, a strong component of the recovery, still has another 2% to grow before it reaches its January 2008 all-time high.
- In contrast to the hard hit sectors, Education and Health Care is 13% above where it was in January 2008.
- Leisure and Hospitality is also up from January 2008, by 7%.
- Professional and Business Services, the shining light of the jobs market, is around 6% above where it was in January 2008.
Overall, although the headline employment number came in at +192K, the part-time employment figure came in +225K, not a good sign a labor market already on sandy footing.