Once again the media cannot get beyond the headline of “Jobs numbers disappoint”. Now I expect politicians to stick to Twitter-like talking point political sound bites. Pundits will dig slightly deeper. But the fact that the print and broadcast media can’t even spend the time to understand why only 120k jobs were created versus the 200k forecasted is lame. Instead, they focused on the impact on the president’s reelection chances. So, if no one else will do it, I guess I will.
For starters, the February job gains totaled 240k, but the March gains dropped to 120k. So the key questions are:
· Were jobs lost in certain sectors in March that weren’t previously lost in February? and/or
· Were gains in certain sectors in March lower than the February gains?
Of course there will always be ‘puts and takes’, that is some increases and some decreases, but it is important to look at the material or largest factors. The most telling numbers I could see in the BLS report were:
· In the Motion Picture and Sound Recording Industry Sector, 19k jobs were created in February, but 8k were lost in March for a net negative change of 27k jobs.
· In Professional and Technical Services, 32k jobs were created in February, but only 14k were created in March for a net negative change of 18k jobs.
· In Education and Health Services, 66k jobs were created in February, but only 37k were created in March for a net negative change of 29k jobs.
These three sectors account for a reduction of 74k jobs created from February to March compared to January to February. There was some scant media attention about increases in manufacturing (37k) and decreases in retail (-34k), but these relative increases and decreases were similar to the Jan-Feb changes.
Could the big change in the Motion Picture and Sound Recording Industry Sector be related to temporary hiring in February in relation to the Grammy and Oscar award shows? These one off events could drive increased hiring followed by immediate reductions. As for the slowdown in Professional and Technical Services, could this be attributed to tax and legal services hiring in February in preparation of April 15th Tax day and that the smaller increase in March was due to February’s saturation. Will we expect to see a net LOSS of jobs in this sector come April and May? As for Education and Health Services, the slowdown was in the Health Services where 27k fewer jobs were created in March versus February. This slowdown in the rate of job increases may reflect the new month to month increase, nonetheless, most analysts expect steady job increases in the health services industry.
Was March an indication of economic slowdown? A one off blip on the radar? Or the true state of job creation that will average 120k-200k new jobs created? I believe economic activity will continue to increase as many households have effectively repaired their balance sheets plus the demand for new vehicles will drive automobile sales and steady job creation. As the calendar turns to spring construction and mining activity may also increase to offset slowdowns elsewhere.
Until the housing market and construction recovers, month to month job gains will be limited as in all previous recoveries it was housing and construction that led the way. Unfortunately, the real estate bubble and subsequent burst has made this recovery unlike other recoveries.
As for how this impacts the presidential election, I will leave that to the media.