March Jobs Report May Signal Employment Boom

The Non Farm Payroll report that the Bureau of Labor Statistics released has a Goldilocks quality to it. Neither too weak nor too strong, the 192,000 jobs created is just right. Unemployment is steady at 6.7% as the participation rate rose to a six-month high of 63.2%. With a terrible winter in the rearview mirror, America may be on the verge of an employment boom.

In addition to the good March results, the BLS revised earlier figures for January and February, netting the US economy an additional 37,000 jobs. Private payrolls accounted for all the jobs in March, and as a result, total private payrolls reached 116.1 million. That is the highest figure since the Great Recession. Another 437,000 jobs and the US economy will have recovered the 8.7 million jobs lost during that disaster.

Bloomberg reported, “Factories reduced payrolls by 1,000 workers after adding 19,000 in February, today’s report showed. Construction companies boosted employment by 19,000 workers and retail payrolls rebounded 21,300.” The fact that temporary jobs rose by 28,500 is also good news. Such jobs are a leading indicator of future permanent hiring.

The Institute for Supply Management reported that its non-manufacturing index ticked up to 53.1 in March; 50 is the level above which the sector expands and below which it contracts. The factory index also rose, though not as dramatically.

A further sign of progress is the auto sector. Bloomberg noted, “Ford Motor Co., Chrysler LLC and General Motors Co. reported March sales that beat analysts” estimates as consumers, whose confidence is at a six-year high, returned to auto showrooms.”Auto sales is also a leading indicator of future employment as the car companies expand their workforces. BMW, for instance, is adding 800 jobs at its plant in South Carolina by 2016, and investing $1 billion to increase production by 50% to 450,000 cars per year.

Finally, the length of the average work week lengthened a bit, from 34.2 hours in February to 34.5 hours in March. This offsets the aggregate decline in the preceding 3 months. The average hourly wage for the private sector dropped a single cent, which amounts to a rounding error. A longer work week more than makes up for a flat rate.

While the US economy has been disappointed by the summer hiring of the last few years, the headwinds are diminishing. One expects that before the summer is over, the employment figures will show a complete replacement of the jobs lost in the Great Recession and an unemployment rate approaching 6.0%.