Financial Review

Not Fixed Yet

Sinclair Noe — February 5, 2016

Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)

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DOW – 211 = 16204
SPX – 35 = 1880
NAS – 146 = 4363
10 Y – .02 = 1.85%
OIL – .73 = 30.99
GOLD + 18.40 = 1174.50

The S&P 500 extended its loss for the week to 3%.  The index is now down more than 8 percent in 2016. The Nasdaq closed at its lowest since October 2014.

Today is a jobs report Friday. If you are a regular listener, you know that I go into quite a bit of detail. The reason is simple. The jobs report is the single most important economic data we can look at each month. So, here are the numbers:

The economy added 151,000 nonfarm jobs in January; that’s below the consensus estimate of 185,000. The unemployment rate dropped from 5% to 4.9%, the lowest reading since 2008; and an indicator the economy is still creating more than enough jobs to keep up with increases in the size of the labor force. The December jobs report was revised down from 292,000 jobs to 262,000. November’s gain was raised to 280,000 from 252,000.

In the past three months, job growth averaged 231,000 jobs per month. In the past 12 months the economy added 2.67 million jobs. Since the beginning of 2010, the American economy has gained nearly 14 million jobs. Total employment is now 4.9 million above the previous peak.

The average wage paid to U.S. workers jumped 0.5% in January, or an increase of 12-cents an hour, to $25.39 an hour. Though there’s an important caveat here: one-time minimum wage hikes may make some of this a temporary bump. This means we probably won’t see a similar jump next month, but the good news is that wages are higher. Wage growth accelerated toward the end of 2015 and it has climbed 2.5% in the past 12 months, just a hair below the post-recession high set in December.

And with inflation, as measured by the CPI at a little under 2%, that means real wage gains for workers; it also explains why the savings rate has been creeping higher. What’s more, the average amount of time workers spent on the job edged up to 34.6 hours in January. That also matches a post-recession high.

Job gains occurred in several industries, led by retail trade, food services and drinking places, health care, and manufacturing. Employment declined in private educational services, transportation and warehousing, and mining.

Here’s a breakdown of the different sectors: Retail trade added 58,000 jobs in January, following essentially no change in December. Employment in food services and drinking places rose in January (+47,000). Over the year, the industry has added 384,000 jobs. Health care continued to add jobs in January (+37,000). Manufacturing added 29,000 jobs in January, following little employment change in 2015. Financial activities rose in January (+18,000). Employment in professional and business services changed little in January (+9,000), after increasing by 60,000 in December.

Private educational services lost 39,000 jobs in January due to larger than normal seasonal layoffs. Employment in transportation and warehousing decreased by 20,000 in January. Most of the loss occurred among couriers and messengers (-14,000), and that can be considered a seasonal adjustment. Government, on both the federal and local level, lost 7,000 jobs, meaning private payrolls actually gained 158,000 jobs for the month. Employment in temporary help services edged down in January (-25,000), after edging up by the same amount in December.

There are still about 6 million workers working part-time for economic reasons; that means they would like a full-time job but they can’t find it. When you add these marginally utilized workers to the 4.9% headline unemployment rate (which is known as the U-3), you get a different measure of unemployment called the U-6, which was unchanged at 9.9%. There are 2.1 million workers who have been unemployed for a half-year or longer (the long-term unemployed). These individuals accounted for about 27 percent of the unemployed.

Among the major worker groups, the unemployment rates for adult men (4.5 percent) and Whites (4.3 percent) declined in January. There was little change in jobless rates for adult women (4.5 percent), teenagers (16.0 percent), Blacks (8.8 percent), Asians (3.7 percent), and Hispanics (5.9 percent).

The labor force participation rate inched up slightly to 62.7%. The participation rate for workers aged 25 to 54 (the prime working years) increased in January to 81.1%, from 80.8% in December. We have seen meaningful improvements in the participation rate over the past six months which suggests that more sidelined workers are being brought back into the labor pool.

So, was this a good report or a bad report? Well, the numbers were down from last month and they were short of estimates, but that doesn’t mean the numbers were bad. The unemployment rate at 4.9% is very good. The November and December reports were very strong, and probably unsustainable at this point in the recovery. Any job gains above 100,000 per month means that the economy is absorbing population growth. It isn’t realistic to think the economy will add 2.67 million jobs in 2016. At some point we reach full employment. The problem is that we don’t know exactly where that point is.

You can’t measure full employment with a single metric. The Federal Reserve has combined some metrics into something they call ZPOP, which looks at the labor participation rate and workers in prime working years and under-utilization. But that doesn’t tell the whole story. We have seen the unemployment rate down around 4.4% for a brief period about 10 years ago. And several states and cities have experienced unemployment under 4% with no apparent adverse effects.

And even if the unemployment rate drops to 4.5% (to pick a number out of the hat), does that mean we have full employment? Not necessarily. We could still have plenty of slack in the labor market at 4.5%. Just because a worker is employed doesn’t mean he or she is doing what they’re best at or employed in their most productive occupation. If an unemployed engineer takes a job waiting tables to feed the family, that worker will be defined as fully employed, but that worker’s potential is hardly fully utilized.

And then you can look at full employment as the point where we start seeing wage push inflation. And even though we saw a nice bump in wages this month, probably because of the new minimum wages, remember that wages declined slightly a month ago. We really see very little inflation from a tight labor market. And even if we did see wage push inflation, we are in a low inflation environment right now, some might say deflationary, which means we might have even further to go before inflation becomes problematic.

If inflation remains below the Fed’s target for an extended period of time and the unemployment rate continues to decline, the Fed might just reduce its estimate of what the full employment rate really is. In the end, the Fed will always have to make its monetary policy decisions based on incomplete information about the economy. So maybe it is more important to look to wages, than it is to look to the net number of new jobs added each month.

Further, this is not the kind of jobs report that would indicate the economy is headed for a recession. And while the financial markets could drag the economy into recession or an incident in the international credit markets could drag the economy into recession or a geopolitical event could make a mess of everything, the simple truth is that the economy is not on the precipice of a recession with 4.9% unemployment.

Get real folks. That is not a recession number. The fact that unemployment is still falling is a big giveaway that we’re not in a recession yet. Granted the recovery is long in the tooth, but from these levels we are still more than a year away from a recession, maybe a bit longer, absent some black swan event.

Following the release of the jobs data the dollar rose against a basket of currencies on the data as traders saw more rate hikes this year. The yield on Treasury debt fell and stocks extended losses. Mohamed el-Erian, chief economic advisor at Allianz said today’s jobs report “serves as a caution to markets that it is too early to take a Federal Reserve March hike completely off the table.”  The financial markets are clearly afraid of another rate hike.

The Fed’s December rate hike was a mistake, but that is not going to cause a recession; unless the FOMC is crazy enough to raise rates further in a weak economy with no inflation. A question that should be asked is if a rationale for quantitative easing was to increase investment asset prices and spur the economy through the wealth effect, what is the effect going to be when after a year of minimal returns on investment assets those assets begin to decline significantly in price as has been the case since the beginning of this year? That might be a false premise but it will surely play into the Fed’s equation.

So, now the Fed has a very difficult and complicated decision to make.  The financial markets have been looking lousy but the labor market is looking fairly solid. And Fed chair Janet Yellen has said she doesn’t want to wait for full employment and signs of inflation before tightening policy. That explains, or at least justifies, the December rate hike.

And while the markets bet on the odds of a rate hike, let’s not forget that the Fed is not out of ammunition. And don’t forget the long-forgotten concept of fiscal policy to stimulate the economy. But the reality is that the jobs recovery still has a long way to go. Too many people fell out of the labor pool, and were just considered as collateral damage explained away as demographics; too many people ended up with the wrong jobs that provide a paycheck but don’t fully utilize their skills.

The economy is growing. It just isn’t fixed yet.

Financial Review

Labor Day Jobs Report

Sinclair Noe — September 4, 2015

Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)

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DOW – 272 = 16,102
SPX – 29 = 1921
NAS – 49 = 4683
10 YR YLD – .04 = 2.13%
OIL – .71 = 46.04
GOLD – 2.30 = 1123.70
SILV – .13 = 14.70

This is a Jobs Report Friday, and I tend to get a little wonkish about the monthly jobs reports, mainly because I believe jobs are pretty much the most important part of the economy; we’ve even set aside a holiday to recognize the importance of labor. Today’s report is especially important because it comes right before a Federal Open Market Committee Meeting where the Fed just might raise interest rates.

The US economy added 173,000 jobs in August, and the unemployment rate dropped to 5.1%. While this was the smallest increase in new jobs since March, the June and July numbers were revised higher by 44,000 jobs. The Labor Department said 245,000 new jobs were created in July instead of 215,000. June’s gain was revised up to 245,000 from 231,000. The 173,000 new jobs missed estimates of 210,000 to 220,000 but the August numbers are notorious for underestimating – only to be revised higher in following months. The unemployment rate of 5.1% is down from July’s 5.3% rate, and beats estimates that the rate would hold steady.

Between 2005 and 2014, August was the month with the lowest first estimate for job growth relative to revisions that were published in the employment reports for the subsequent two months. Over that period, on average the government found 58,000 more jobs added to payrolls in August than initially figured. Job growth in August was revised lower only in 2005 and 2008. One reason why August is difficult to calculate is because it marks the start of the school year, which varies from town to town.

So, one way to get a better grasp on the numbers is to look at longer-term trends. Over the last three months the economy added 221,000 new jobs on average – fairly solid gains. In August, the year-over-year change was over 2.9 million jobs – again, fairly solid gains. The economy has been adding jobs every month going back to March 2010 – a nice streak. The U.S. has added an average of 212,000 jobs a month in 2015 and the economy is on track to generate more than 2 million jobs for the fifth year in a row.

The bulk of the hiring in August, one-third of all new jobs, took place in health care. Healthcare added 56,000 jobs; Professional and business services added 33,000 jobs; employment in eating and drinking places gained 26,000 job; financial firms hired 19,000; retail added over 11,000, wholesale trades hired almost 8,000, construction gained 3,000. Government hired 33,000 workers and it looks like the declines in government hiring are now over. Federal payrolls were unchanged in July, and Federal employment is up just 6,000 year-to-date. Mining and logging, an industry that includes oil exploration and drilling, lost 10,000 jobs; and manufacturing was the big loser – down 17,000 jobs for the month.

The average hourly wage paid to American workers rose 8 cents, or 0.3%, in August to $25.09 an hour. From August 2014 to August 2015 hourly wages rose 2.2%, matching the best gain of the past four years. The Federal Reserve has targeted a 2% rate of inflation, but in the 12-months through July, the Consumer price Index climbed just 0.2%. This means that workers are seeing wage increases that are running faster than inflation – that means real gains – but wage pressure has not been strong enough to push inflation throughout the economy.

But there is another, shorter-term trend in place, wage gains in the past 3 months have only been running at 1.9%. The average workweek for all employees on private nonfarm payrolls edged up by 0.1 hour to 34.6 hours in August. The manufacturing workweek was unchanged at 40.8 hours, and factory overtime edged down by 0.1 hour to 3.3 hours.

Full-time jobs climbed to 122 million, exceeding the prior peak reached in November 2007. The U-6 unemployment rate fell to 10.3%, the lowest level since June 2008; U-6 includes unemployed plus underutilized workers, or people working part-time for economic reasons, plus discouraged workers who aren’t counted under the U-3 measure, or the headline number.

The headline or U-3 unemployment rate doesn’t capture workers who, because of a difficult job market, have stopped looking for work.  The labor force participation rate – the share of the population that is either working or actively looking for work – dropped off sharply during the recession, from about 66 percent to about 63 percent.  While some of those folks left for retirement, others–maybe a third to a half by some measures–can be enticed back into a more welcoming job market.

The nation’s unemployment rate, meanwhile, fell to 5.1% from 5.3%, marking the lowest level since April 2008. The jobless rate is determined by a separate survey of households that showed a sharp 237,000 drop in the number of people who said they were unemployed. Only a smattering of people dropped out of the labor force. The labor force participation rate was unchanged at 62.6% – which is still a historically low rate. There are 2.19 million workers who have been unemployed for more than 26 weeks and still want a job. This was up slightly from 2.18 million in July.

What this means is that there are still lots of potential workers ready to jump back in the labor pool and it is possible that the economy could add new jobs, but see the unemployment rate move higher as workers are encouraged to look for work.

In less than 2 weeks the Federal Open Market Committee will meet to determine monetary policy, and the strength or weakness of the labor market will be a major factor in their deliberations. The Fed has set a target of 5.2% unemployment as the level that might warrant a rate hike, but that won’t be their only concern. An increase seemed all but certain just weeks ago before the stock market’s slide amid fears of a softening Chinese economy and stagnant growth worldwide. Janet Yellen has repeatedly suggested the FOMC was waiting to see data showing a sustained economic recovery.

In a speech just before the jobs report, Richmond Fed president Jeffrey Lacker said the labor market supported the case for raising rates sooner rather than later. But this report was unlikely to “materially alter the labor market picture or, for that matter, the monetary policy outlook.”

Fed-funds futures, used by investors and traders to place bets on central-bank policy, showed Friday a 34% likelihood of a rate increase at the September meeting, compared with 27% before the jobs report. The odds had been around 50% a month ago.

Finance ministers and central bankers of G20 member states have gathered in Ankara, Turkey today. The  Federal Reserve is coming under pressure from emerging markets not to raise rates too soon as turmoil in China threatens global growth, but the G20 will not publicly call for any delay. This G20 comes at a very good time because it gives the Fed an opportunity to gauge all the elements at stake.

In addition to China and emerging markets and all the other concerns, the Fed will likely consider the impact on Wall Street; back when the Fed hinted at ending Quantitative Easing, Wall Street threw a Taper Tantrum. And as the Fed has been inching closer to raising interest rates, Wall Street has thrown what might be called a Rate Ruckus, (you’re welcome to come up with a better name if you wish). In the U.S. stock market, the S&P 500 had its sixth decline exceeding 1 percent in 12 days.

Prior to that there had been 10 such declines since January. The benchmark gauge has moved up or down by an average of more than 2 percent a day since falling out of its 2015 trading range on Aug. 20; almost four times as much as in the prior nine months. September is historically the worst month of the year for the S&P 500, with the equity gauge falling 1.1 percent on average based on data going back to 1927. So, you could blame the declines today on anything, including history, but part of it was a Rate Ruckus.

And there are plenty of reasons why the argument can be made that more needs to be done to improve employment: the Labor Force Participation rate is too low, wages aren’t going up enough, millions have just given up on the prospect of a job, and the jobs created are not quality jobs. The current pace of job growth would result in an extremely low unemployment rate of 4.2% a year from today, with other factors such as labor-force participation held constant. The rate has dropped by about a percentage point over each of the last four 12-month periods.

So even though the Fed targeted 5.2%, as if this is the magical full employment rate, it doesn’t paint a complete picture. The unemployment rate says “raise!” The payroll number says “hold!” The markets will whine and complain no matter what the Fed does.

This month’s jobs report showed signs of strength and signs of weakness, along with very little clarity. One month’s job data is not enough to seal the deal one way or the other. The Fed could just as easily claim victory with the unemployment rate at 5.1%. And like T-Ball athletes, everybody gets a trophy. For many on Wall Street, they can’t imagine a rate hike; after all, it has been almost 10 years since we’ve seen one, so there are actually traders on Wall Street who have not seen a rate hike from the Fed. It’s like the anticipation of ripping off the Band-Aid is worse than the actual act. At a certain point, and we don’t know where that point is, the Fed will likely just raise rates; just do it and be done. That’s my guess.

The Financial markets will be closed on Monday. So, have a safe and happy Labor Day holiday weekend.

Financial Review

Jobs Report Friday

Sinclair Noe — March 6, 2015

 

Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)

Subscribe: iTunes | RSS

DOW – 278 = 17,856
SPX – 29 = 2071
NAS – 55 = 4927
10 YR YLD + .13 = 2.24%
OIL – 1.02 = 49.74
GOLD – 31.90 = 1164.30
SILV – .35 = 15.81

The first Friday of the month is all about jobs.

The Bureau of Labor Statistics reports the economy added 295,000 new jobs in February. The unemployment rate dropped from 5.7% to 5.5%. The results topped estimates of 235,000 jobs, and also beats the revised 239,000 reported for January (revised down from 257,000); and also up from 188,000 a year ago.

The estimates were lower, mainly because most of the country has been experiencing harsh winter weather, and on the West Coast there was a shutdown and a slowdown at the ports. None of that seemed to matter, and if you are thinking ahead, you might imagine that the economy will just keep getting stronger as the weather gets better.

Now, you might look at how Wall Street responded to this very good news about jobs and you might be scratching your head, you might even think Wall Street is opposed to honest, hardworking Americans. Well, maybe a little, but the reason for the sell-off is that a stronger economy means higher interest rates. Investors are looking and focusing entirely on what the Federal Reserve will do in the coming months. Effectively good news in this data point supports the notion that they will raise rates in the not-too-distant future. Wall Street and corporate America have been enjoying a long run of free or at least very cheap money.

The Fed says any interest rate increase decision will be data dependent, but it should not be just that the unemployment rate drops to a given level. Disinflation leaves some wiggle room. And the Fed should also consider the long-term damage suffered by workers who have dropped out of the labor force or are long-term unemployed. Better to grow a little faster than desired rather than stamp out a recovery that is just approaching escape velocity.

Wages rose 0.1%, or .03 cents to $24.78. Average hourly wages for private-sector workers have been rising slowly, at around a 2% annual pace, for the last few years. There was a 0.5% increase in wages in January, but that now looks like a “one off” month. The Consumer Price Index, or inflation at the retail level, fell 0.1% in January compared to a year earlier; so that means “real” wages actually grew.

The US economy added over one million jobs between November and January, and it looks like the labor market is getting stronger and stronger. February was the 53rd straight month of employment gains, and the 12th straight month payrolls have increased by at least 200,000, the best run since a 19-month stretch that ended in March 1995. Payrolls rose 3.1 million in 2014, the most in 15 years. And payrolls are up 3.3 million year-over-year in February.

Most industries added workers to their payrolls. Bars and restaurants led the way by adding 59,000 jobs. It looks like people who are saving a few dollars at the gas pump are spending a few dollars for dining out. Unfortunately, bars and restaurants are not typically high paying jobs. Education and health services added 54,000 jobs. White-collar business and professional firms hired 51,000 employees, while cutting back on their use of temporary workers. The number of temp workers fell for the second month in a row for the first time since 2011. A cut back in temp jobs may indicate that temp workers are getting permanent positions.

Retailers added 32,000 workers. Construction companies created 29,000 jobs in February despite poor weather in much of the eastern half of the country. Transportation and warehousing added 18,000 jobs; financial activities added 10,000 jobs; and Information added 7,000.

Manufacturers created 9,000 new jobs, the smallest amount in 18 months. A few factors hit manufacturing, including a stronger dollar and weak global growth that has curtailed demand for American-made goods. In a separate report this morning the Commerce Department said exports fell 2.9% in January to a seasonally adjusted $189.4 billion, marking the third decline in a row. Imports decreased 3.9% to $231.2 billion, resulting in a lower trade gap of $41.8 billion for December.

Government added 7,000 jobs last month; those were state and local jobs, not federal. State and local government jobs are slowly posting gains – now up 138,000 from the bottom but still 620,000 below the peak.

There are still 6.6 million workers who are underutilized, working part-time even though they would prefer full-time work; that’s down slightly from 6.8 million in January. If you add underutilized workers with unemployed workers, you come up with a different measure called U-6, which figures the unemployment rate at 11%, down from 11.3% in January, and the lowest U-6 since September 2008.

And let’s be clear when we look at U-6 compared to the U-3 unemployment rate, which is the headline number at 5.5%. Sometimes, some people say the U-6 is the real unemployment number, and it usually goes in line with some theory that the government is trying to hide the real numbers. No, these are two separate numbers. And you should not try to compare apples to oranges. The U-6 number can help us get a better understanding of slack in the labor market, which goes a long way to understanding why wages remain stagnant.

Another reason for stagnant wage growth is that many people have been sitting on the sidelines, sometimes discouraged from looking for work, sometimes they have gone to school for training, and in the case of the boomer population, many have retired, even if it was involuntary. According to the BLS, there are 2.7 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 2.8 in January. And this was reflected in the participation rate, which dropped from 62.9% to 62.8%. The participation rate is the percentage of the working age population in the labor force. What we see here is that some long-term unemployed have moved back into the labor pool, while the massive demographic shift persists, and others have walked away from the pool. The drop in the jobless rate reflected both an increase in hiring and a decline in the number of people in the labor force.

When people get back in the labor pool after a long bout with unemployment, they typically return for lower wages. Also, part-time workers have very little power in negotiating higher wages; usually their best hope is for more hours. This puts a downward bias on wages.  There is growing evidence that an improvement is underway. One indication is the growing number of younger workers changing jobs as they gain more confidence in their prospects. There were 2.7 million quits in December; you have to quit a job before you get a new job. And you don’t quit unless you are fairly confident about a new job. On average, workers who switch jobs get a 14% pay increase in their new salaries.

Job openings now top 5 million, the highest level since January 2001. The number of job openings is seen a measure of labor market slack, with more job openings indicating the balance of power in the labor market shifting towards workers looking for jobs and away from employers looking to hire.

We have seen strikes at oil refineries and a slowdown at the West Coast ports; that indicates that workers feel they have enough bargaining power and confidence to demand higher wages. At the same time, we heard that Walmart is raising wages for workers to $9 an hour, and up to $10 an hour next year; a move that is slowly and surely being repeated at other retailers. This indicates that it is cheaper to retain workers at higher wages than it is to find new workers.

Labor advocates say retailers should be focusing on adding hours as well as lifting pay for some workers. Retail workers make up 11% of working adults but that 18% of those who are working part time would rather be employed full time. Many who want more hours are women from minority groups.

Whenever we hear about stagnant wage growth we hear the argument of the “skills gap”; this is the idea that businesses can’t find the workers they need because American workers do not have the skills or education to perform. And it is always a little difficult to counter that argument without sounding anti-education. So don’t take this wrong. Education is still a great way to get a good paying job. Highly educated workers generally have a higher rate of employment and generally higher wages. But that doesn’t tell the whole story.

If businesses were desperate for workers with certain skills, they would presumably be offering premium wages to attract such workers. So where are these fortunate professions? You can find some examples here and there. Interestingly, some of the biggest recent wage gains are for skilled manual labor — sewing machine operators,boilermakers — as some manufacturing production moves back to America. But the notion that highly skilled workers are generally in demand is just false.

Meanwhile, the inflation-adjusted earnings of highly educated Americans have gone nowhere since the late 1990s; their wages are just as stagnant as everybody else. The premium to higher education has plateaued over the last 10 years. We see evidence highly skilled workers have less rapid career trajectories and are moving into less skill occupations if anything. Productivity is not growing very rapidly, and a lot of the employment growth we’ve seen in the past 15 years has been in relatively low education, in-person service occupations.  Wage inflation in the United States is 2%. It has not gone up in five years. There are not 3% of the economy where there’s any evidence of hyper wage inflation of a kind that would go with worker shortages. The idea that you can just have better training and then there are all these jobs that will magically appear, all these places where there are shortages and we just need to train people is fundamentally an evasion.

The simple reality is that demand creates jobs. If someone has a job, they spend their paychecks and that creates demand, and businesses then hire someone to meet the demand rather than lose the business. Unless you’re doing things that have things that are effecting the demand for jobs, more training and more education just means you’re helping people win a race to get a finite number of jobs. The core problem is that there aren’t enough jobs.

Friday, April 04, 2014 - The March Jobs Report

Financial Review with Sinclair Noe

DOW – 159 = 16,412
SPX – 23 = 1865
NAS – 110 = 4127 (-2.6%)
10 YR YLD - .06 = 2.73%
OIL + .77 = 101.06
GOLD + 15.50 = 1303.30
SILV + .14 = 20.06

Today is a jobs report Friday. Let’s get geeky.

The Labor Department reported nonfarm payrolls increased by 192,000 jobs last month after rising by 197,000 in February (that’s revised from 175,000). The prior 2 months were revised to show 37,000 more jobs than previously estimated; the revisions indicate that the bad winter weather was not a huge problem for the labor market; it did have an effect but not huge, and we certainly shouldn’t hear any more weather related excuses. The unemployment rate was unchanged at 6.7% as more people were looking for jobs. The consensus estimate was 200,000 jobs, so the figures were a little below expectations.

Private employment rose to 116.09 million, finally moving beyond the previous high of 115.98 million recorded at the very start of the recession in January 2008.Total employment is just a little below the pre-financial crisis days; we still have about 437,000 fewer jobs than the peak in 2008, but private employment is now above the peak by 110,000 and at a new all-time high; the difference is that more than a half million government jobs have been cut during that time; also, the population and the labor force has grown over the past 6 years, so the unemployment rate remains fairly high. And the idea is not just to get back to where we were, but to get back to where we should be. Keep in mind, we have 15 million more people now than we did then.

The economy added 533 thousand jobs in Q1 this year compared to 618 thousand in Q1 2013; the bad weather is the excuse for the weaker performance. Still the unemployment rate has dropped from 8.2% in March 2012 to 6.7% now.

The Labor Force Participation Rate was increased in March to 63.2%. This is the percentage of the working age population in the labor force.  And while the participation rate is still low compared to the past 20 years, it is a positive sign that more people are looking for jobs, suggesting they were lured back into the job hunt as openings began to appear. Or possibly, more long-term unemployed were pushed back into the job market as benefits were cut. The number of long-term unemployed fell by 110,000, and over the past year, the ranks of the long-term jobless have dropped by 837,000; meanwhile, the ratio of the population reporting they had a job ticked up to 58.9% from 58.8%. Much has been made of the multiyear slide in the labor force participation rate since the financial crisis of 2008. In the last few months, however, the labor force participation rate has actually stabilized.

Anyway, about a half million people jumped back into the labor pool and about that many found jobs; if it were not for the increase in the size of the labor force, the unemployment rate would have fallen to 6.5%. It also means that the unemployment rate is unlikely to keep falling as sharply as it has in the last two years, because people who are again looking for work are counted as unemployed, while those who have given up and dropped out of the labor force are not.

There are 7.4 million people working part-time who would prefer to work full-time, or they are part time because their hours have been cut back, or they have given up looking for a job. There is a separate measure for them, known as the U-6 unemployment rate, which comes in at 12.7%; up from 12.6% in February, but down from 13.8% a year ago. The headline unemployment rate of 6.7% is known as U-3. The U-6 includes all those people in U-3 plus all the underutilized and discouraged workers. In healthier job markets, the gap between U-3 and U-6 is closer to 3% or 4%.

After months of declines in the part-time labor force, the BLS reported a spike of 414,000 new part-time workers in March, which was the largest monthly increase in nearly two years. This could just as well be an aberration, as it was a year ago, but the part-time picture in the American workforce is far from rosy. The financial crisis resulted in a spike in the number of part-time workers as a percentage of the labor force, and this has remained elevated ever since.

The increase in jobs was paced by gains in construction, retail and professional services. Government employment over all remained flat, with federal and state governments cutting 11,000 jobs even as local governments added 9,000 positions. Over the past 12 months, total federal employment has fallen by 85,000. That's pretty much how it has gone throughout the grinding recovery; private hiring has been slow but steady, while austerity has led to government job cuts that have helped keep the recovery frustratingly slow.

The health care sector added 19,000 jobs. Business services added 57,000 jobs. Food services employment increased by 30,000, bringing the sector’s gain over the past year to 323,000. The manufacturing sector lost 1,000 jobs.

While average hourly earnings were basically flat, the length of the average workweek edged higher. The average work week for private employees edged up to 34.5 hours, offsetting a net decline over the prior three months; as a consequence of the bad weather, many people lost time on the job, but it was made up in March. Average weekly hours, at 34.5 per worker, aren't far off of the 34.7 hours per worker recorded six years ago, but when you add up a fifth of an hour across more than 100 million workers, it makes a very big difference in the amount of time Americans actually spent on the job.

Average hourly earnings for private employees fell by 1 cent to $24.30 from a month earlier. Over the year, average hourly earnings have risen by 49 cents, or 2.1%. The average weekly wage rose to $838.55 from $833.83. The reason for this anomaly: a 12-minute increase in the average amount of time worked each week.  Conclusion: Bargaining power for workers is still subdued. But their services are more in demand.

The jobs report also provides details about who is benefiting from recovery and who is not. The recovery has been good for college educated workers and whites. It has been much more difficult for the long-term unemployed, young adults without a college education, and African Americans. Among adults 25 and older who have a bachelor’s degree the unemployment rate is just 3.4%, about half the over-all rate.

The unemployment rate for college graduates never went above five per cent in the downturn. At the other end of the educational spectrum, things were very different. For adults 25 and older without a high-school diploma, the jobless rate hit 15.6% in 2010. Last month, it stood at 9.6%.

Among white men aged 20 and over, the unemployment rate is now 5.3%; for African-American men over 20, it is 12.1%. The gap between white and black females is also very large, 5.3% of white women aged twenty and over are out of work (the same as the rate for white men), but 11% of black women in the same age group are jobless. Hispanics also have substantially higher rates of unemployment than whites, but the differences aren’t as large. Among Hispanic men aged twenty and over, the jobless rate in March was 6.9%; among Hispanic women aged twenty and over, the rate was 8.4%.

For teenagers between the ages of 16 and 19 who aren’t in school or college, the unemployment rate is 20.9%. That’s down from 23.3% a year ago. It’s still a very high figure, and, among minority teenagers, it’s even higher.

The stock market moved a little higher this morning following the jobs report. It wasn’t a bad jobs report that sank the market today. Most of the stories I read had a theme of not too hot, not too cold, a Goldilocks report. The Fed uses the jobs report to help determine the timing and pace of further cuts to its monthly bond-buying program. The central bank also looks to the unemployment rate as a factor in deciding when to raise its benchmark interest rate. This report did not sway the Fed one way or the other.

What went wrong on Wall Street? It’s always dangerous to lay an exact cause on any singular event, but the big damage today was in the Nasdaq and the tech and biotechs. There’s a little bit of nervousness about some of the high multiples in the biotech area and computer and Internet-related stocks. You’re having another wave of selling in that very high-momentum group. When you’re at record high levels, people start to get a little tentative going into weekends.