5 Charts From Today’s Employment Report by Eric Bush, CFA – Gavekal Capital Blog
By most measures, March’s employment report was a good one. Nonfarm payrolls came in slightly ahead of consensus while February’s strong number was revised slightly higher still. Private payrolls also came in above consensus but unfortunately manufacturing payrolls came in well below expectations (most manufacturing jobs lost since December 2009). The household survey also was above expectations as was average hourly earnings. The unemployment rate actually ticked a tenth higher as the participation rate increased (again another positive sign). Below are 5 notable charts from today’s report.
Nominal income proxy (payroll employment * average weekly hours * average hourly earnings) declined to its lowest level since February 2014 on a 1-quarter annualized basis. This is in contrast to December’s report when the nominal income proxy was growing at its fastest rate since May 2014. The good news is that the year-over-year change remains at a healthy 4% growth rate.
Real average hourly earnings (average hourly earnings/CPI) increased to a 2.92% 1-quarter annualized growth rate. The year-over-year growth rate stands at 1.4% and real average hourly earnings have been increases on a year-over-year basis every month since February 2013. This is the longest such streak since the late 1990’s.
The participation rate increased to 63%, the highest level in over two year as a stronger job market is drawing in more workers. In addition, the labor increased again and is growing at a 1.5% year-over-year rate. This is the fastest growth rate for the labor force since February 2007.
Temporary employment tends to lead permanent employment and this leads us to our scariest looking chart. The one-month difference of the one-quarter moving average of temporary employment fell the most since August 2009. This suggest that we may have a slow down in non farm payroll growth over the next several months.
There is a historically unique clustering in the distribution among the duration of the unemployed. Roughly 30% of the unemployed have been unemployed for less than 5 weeks. This is historically low for all periods outside of the most recent recovery. Roughly 28% of the unemployed have been out of work for more than 27 weeks. This is historically high outside of the most recent recovery. Finally, about 28% of the unemployed have been out of work from 5-14 weeks. This finally back in to the normal historic range going back to 1947.