Unemployment: No Change
The hints of improvement we have seen in some of the other reports on payrolls and jobs did not translate into an improvement in the official unemployment rate – this morning’s release shows the unemployment rate stuck at 9.7% for February.
Within the data there is nothing stands out as a feature we can latch onto and argue that a downward trend is imminent: the best we can say is that this report, like all the others in the past week, was heavily affected by the weather over the past few weeks. When factories and other businesses tell the government that they had idle time during February there is no way that the statistics can distinguish between a weather related furlough or a business related furlough. So we are reduced to having to guess what might be going on beneath the surface. My preference is that we all wait until the March data is released in early April before we make any firm judgements about the job market.
As of now nothing appears to be going on.
While we sit and wait I want to draw your attention to the appendices that are routinely released along with the headline news. Buried in the report, in Appendix 15 to be exact, is a compilation of ‘alternative measures of labor underutilization’. It is here that the Bureau of Labor Statistics, the people who compile the report, reveal different aggregations of data drawn from their household survey. In particular they add to the basic unemployment rate the number of people who report that they would like a job, but have given up looking for one. These so-called discouraged workers are not part of the official unemployment rate because they have not actively looked for a new job during the last four weeks. Also added are people who tell the government that they are being forced to work part time even though they would prefer to work full time.
Once we add all these various categories of people we arrive at a better determination of the underutilization of the workforce. That rate in February was 16.8%, up from 15.0% a year ago, but down from its peak of 17.4% as of last October.
The monthly employment report from the BLS is based on two different surveys. The first is the survey of households, which is where the unemployment rate is determined. The second is the survey of businesses and employers – the establishment survey. This latter report tells us that total payrolls fell last month by another 36,000, which, given the size of the workforce, is negligible. So far during the current crisis we have shed about 8.4 million jobs from payrolls, with the hardest hit sector being construction which has lost about 1.9 million. Last month construction lost a further 64,000 and there seems to be no end in sight for continued losses in that arena. The bright news was a 51,000 gain in jobs in temporary help services. Presumably this gain is a sign that activity is picking up, but that businesses are still loathe to hire full time workers, so they rely on temp services. Hopefully as the economy struggles to life some of these temp gains will translate into permanent gains. Another glimmer of hope was in manufacturing where the decline ended and there was even a very slight – tiny – gain. Perhaps we are turning the corner after all.
In sum: today’s employment report does little to illuminate the state of the economy. Given the muddied weather related figures we should be cautious in drawing too many conclusions about the job market. One thing we can say is that it hasn’t leapt to life. But beyond that: we have to wait for another month so we can get a clear idea of how the year is shaping up.
