Unemployment Rate Holds Steady at 9.7%
The jobs report released today shows unemployment holding steady at 9.7%, the employment to population ratio increasing to 58.6%, and non-farm employment increasing by 162,000 (48,000 of these are census workers). Here are graphs of the unemployment rate, the employment-population ratio, and civilian employment:
For the last three months the unemployment rate has held steady at 9.7%. Essentially, what is happening is that the pace of job creation is matching the number of people returning to the labor force, but once the change in labor force is accounted for there is no change in the rate of unemployment. The extent to which workers will return to the labor force as jobs reappear is unknown, but I expect it will be sufficient to keep the unemployment rate elevated and relatively constant for many months to come.
Dean Baker digs into the underlying numbers:
The job gains in the establishment survey reflect a bounceback from weather-depressed levels in February. This is shown most clearly in construction, which showed a gain of 15,000, the first increase since June of 2007. However, the March level is down by 44,000 from January. With construction still trending downward, it is virtually certain that this sector will continue to shed jobs.And I completely agree with his conclusion:
Manufacturing appears to have genuinely turned the corner, adding 17,000 jobs in March. This brings the gains since December to 45,000, almost all of it in the durable goods sector. It is likely that manufacturing employment will continue to rise, albeit at a slow pace.Other notable job gains include 14,900 in retail (11,500 of which were in building supply stores) and 26,800 in health care, up from a weather-depressed 14,100 gain in February. Employment services added 42,600 jobs. While this is impressive, it is actually slower than the rate of job growth in this sector in the fall.
State and local governments shed 9,000 jobs, a loss that was more than offset by the federal government's hiring of 48,000 workers for the Census. State and local governments have shed 72,000 jobs since December, or 24,000 a month. This pace is likely to increase as the new fiscal year approaches. Other notable job losers include real estate, which lost 6,100 jobs. ... Information services lost 12,000 jobs; employment in this sector is down by 24.1 percent over the decade.
While the trend in overall employment has been positive in recent months, the situation appears to be worsening for African Americans. The unemployment rate for blacks rose to 16.5 percent, equaling its high for the recession reached in December. The unemployment rate for black men rose to 19.0 percent, a new peak. This is a common pattern with the unemployment rate for African Americans peaking after the overall unemployment rate peaks.
The job gains continue to go disproportionately to older workers...
There was an increase of 295,000 in the number of people involuntarily working part-time, pushing this measure near its recession peak. The duration measures all hit new highs in March. ...
Nominal wages fell in March for the sixth time since 1964. This is not a good sign for future income growth.
The overall picture here is not very positive. While we are seeing job growth, it is at a very slow pace. The average in the private sector over the last two months was just 66,000 jobs. With the public sector shedding jobs, we will need more rapid job growth just to stay even with the growth in the labor force.This report is an improvement over past reports, but it is not a sign of a robust return to full employment. Instead, this signals a very long, gradual, drawn out recovery process. The labor market could use more help, and with the slow pace of the recovery it is not too late, but the political winds are blowing against any action from Congress to help with job creation. Thus, it appears we are stuck for the time being with the unemployment rate moving sideways, with job growth barely keeping up with the growth in the labor force, and all of our hopes to do better pinned to hope for increased job growth in the private sector. Unfortunately, for now it is just that -- a hope -- as there are not yet any signs that accelerated job growth is just around the corner. There is more hope than before, and it does appear we are beginning to turn the corner, but we aren't there yet and it's an open question as to how long it will take to for labor markets to fully recover. My expectation is that job growth will be frustratingly slow, but just positive enough to keep our hopes alive.
