The U.S. non-farm payroll added 431,000 jobs in March, 11 months in a row and 14 more in the last 15 months, with profits above 400,000. The average monthly profit for the last 15 months is 562,000 (see first chart).
Private payroll gained 426,000 in March, the 10th and 13th in a rowM Over 400,000 in the last 15 months (see first chart). The average profit in the last 15 months is 30 530,000 Total non-farm payrolls and private payrolls are both less than 1 percent below their February 2020 peaks, with total non-farm payrolls being 1.6 million and private wages less than 1 million (see second chart).
The gains in recent months have been massive. Of the 426,000 gains in personal pay, personal services added 366,000 as against the 12-month average of 460,500 whereas manufacturing industries added 60,000 vs. 12-month average 54,800.
Among the private service-manufacturing industries, leisure and hospitality added 112,000 vs. 12-month average for 173,800 months, business and professional services added 102,000 (vs. 91,300), education and health services increased 53,000 (vs. 50,100) retail sales 49,000 (vs. 45,600), and wholesale trade 7,000 (vs. 12,800); Transportation and warehousing lost 500 jobs (as opposed to an average profit of 33,900; see Chart 3).
Of the 60,000 gains in the commodity-manufacturing industry, construction added 19,000, where durable-product production increased by 22,000 and durable-product production increased by 16,000 and mining and logging industry increased by 3,000 (3,000).
Despite strong, broad-based gains over the past year, nearly half of the industrial groups in the employment report are above their pre-epidemic levels. Transportation and warehousing are the most profitable, where wages are more than 10 percent of the pre-epidemic level (see Chart 4). This could be a positive sign for some of the logistical problems plaguing US businesses.
Average hourly earnings rose 0.4 percent in March, leaving the 12-month profit at 5.6 percent. Average hourly earnings for manufacturing and non-supervisory workers also rose 0.4 percent month-on-month and 6.7 percent year-on-year. Average hourly income data should be interpreted carefully, as the concentration of job losses and recovery for low-paying jobs during an epidemic distorts the total number. The average work week for all workers decreased by 34.6 hours in March, while the average work week for manufacturing and non-supervisory workers decreased by 0.1 hours to 34.1 hours. Combined with hourly earnings and hourly wages, the overall weekly pay index for all employees rose 0.5 percent in March, up 10.80 percent from a year earlier; The index for manufacturing and supervisory workers also rose 0.5 percent but 11.5 percent higher than the year-ago level.
The total number of officially unemployed in March was 5.952 million. The unemployment rate fell to 3.6 percent, while the lower employment rate, referred to as the U-6 rate, was 7.2 percent in March. As of March 2020, the unemployment rate was 3.5 percent whereas the unemployment rate was 6.9 percent (see the top of the fifth chart). For February 2020, the unemployment rate was 3.5 percent whereas the U-6 rate was 7.0 percent.
The employment-to-population ratio, one of the most coincidental indicators of AIER, fell to 60.1 percent in March, which is still significantly lower than 61.2 percent in February 2020 (see fifth chart below).
It took two years, but in February 2020 the labor force almost returned to normal (see Chart 6). However, with population growth over time, the overall participation rate is well below February 2020. The participation rate was 62.4 percent in March 2022 and 63.4 percent in February 2020 (see below fifth and sixth charts).
The March jobs report shows that total non-farm and private wages posted even stronger gains. Both are close to the pre-epidemic level similar to the civilian labor force. However, with population growth, labor force participation has remained significantly lower than the pre-epidemic rate. Joining and employing people in the labor force will probably help reduce the upward pressure on consumer prices. Upward price pressures have led to a new cycle of tightening Fed policy, increasing the risk of policy errors. Moreover, the geopolitical instability surrounding Russia’s aggression in Ukraine has had a dramatic effect on capital and commodity markets, launching a new wave of potential disruptions to business. Attitudes have become extremely uncertain and extreme caution is required.
Robert Hughes
Robert Hughes joined AIER in 2013 for over 25 years researching economic and financial markets on Wall Street. Bob previously headed Brown Brothers Harriman’s Global Equity Strategy, where he developed an equity investment strategy that combines top-down macro analysis with bottom-up fundamentals.
Prior to BBH, Bob was a senior equity strategist at State Street Global Markets, a senior economic strategist at Prudential Equity Group, and a senior economist at Citicorp Investment Services and a financial markets analyst. Bob holds an MA in Economics from Fordham University and a BS in Business from Lehigh University.