Lion Of March Jobs Report

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by: Max Fraad Wolff

The Bureau of Labor Statistics has released the March 2012 employment report, Non-Farm Payrolls April 2012[1]. 120,000 net new jobs were created. This is barely adequate to keep pace with population growth. 120,000 jobs created in March are less than half the average of the last 3 months new job average creation rate of 246,000. This was a disappointing number and was well below consensus estimates looking for slightly over 200,000 new jobs. There was significant weakness across most areas of this jobs report. The widely report U-3 unemployment rate declined from 8.3% to 8.2%[2]. This unemployment rate decline came as 163,000 people stopped looking for work. The national unemployment rate has fallen 1 full percentage point since March 2011. The U-6 broad measure of unemployment, declined to 14.5% in March 2012 from 14.9% in February. The broad U-6 measure includes involuntary part time workers and those marginally attached to the labor force.

The March 2012 average workweek edged down, a negative indicator of employer demand. Also a worrying sign, temporary employment declined by 7,500 jobs[3]. The long-term unemployed continue to represent 42.5% of the unemployed and have been out of work for 27 weeks or longer. Construction contributed to the weakness of the job report, 7,000 net job losses. Retail trade employment, recently strong and a leading employment area, was very weak in March with 33,800 net job losses. Food service employment was a bright sport, adding 36,900 jobs. Sadly these jobs generally pay poorly.

A note on which jobs are growing

Low paying and service jobs comprise 9 of the 10 most rapidly growing job categories in the US according to Bureau of Labor Statistics (BLS) research published in Occupational Employment Statistics. The top 10 occupations account for 20% of US employment. The low wage structures in 9 of the 10 areas are contributing to dissatisfaction about the economy and weak consumer spending.

Most of the largest occupations were relatively low paying. Of the 10 largest occupations, only registered nurses, with an annual mean wage of $69,110, had an average wage above the U.S. all- occupations mean of $21.74 per hour or $45,230 annually. Annual mean wages for the rest of the 10 largest occupations ranged from $18,790 for combined food preparation and serving workers to $33,120 for customer service representatives.

BLS Occupation and Wage Summary 27 March 2012

The weakness of the March 2012 jobs report will rattle business confidence and factor into the Presidential race, at least until April jobs numbers are reported. We continue to see limited participation in the post 2009 recession recovery. New job creation is on pace to seriously underwhelm. This comes on the heals of a very severe economic downtown with generationally significant job loss. Younger workers continue to suffer disproportionately. Whites age 16 to 19 suffered 22.5% unemployment in March. African Americans aged 16 to 19 years old suffered unemployment of 40.5% in March and Hispanics 16 to 19 years old faced 30.5% unemployment.

Employment remains weak and this is adding volatility to political processes and increasing dis-satisfaction with leadership and the economy. The major business question has to be, how long can corporate profits stay elevated with weak general growth and missing labor participation?

[1] Economic Situation Summary 06 April 2012

[2] Alternative Measures of Labor Under-Utilization

[3] Employees on Non-Farm Payrolls by Industry Sector

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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