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Employment Situation
Released On 4/3/2009 8:30:00 AM For Mar, 2009
PriorConsensusConsensus RangeActual
Nonfarm Payrolls - M/M change-651,000 -650,000 -711,000  to -525,000 -663,000 
Unemployment Rate - Level8.1 %8.5 %8.2 % to 8.6 %8.5 %
Average Hourly Earnings - M/M change0.2 %0.2 %0.1 % to 0.3 %0.2 %
Av Workweek - All Employees33.3 hrs33.3 hrs33.2 hrs to 33.3 hrs33.2 hrs

Highlights
Employment in March continued to plunge-but largely as expected. Nonfarm payroll employment in March dropped 663,000, following a plunge of 651,000 in February and a decline of 741,000 in January. The March number was only a little worse than the market forecast for a 650,000 drop. February was unrevised while January was bumped down by 86,000. For the latest month, losses were widespread in both goods-producing and services-providing industries.

From the household survey, the civilian unemployment rate jumped to 8.5 percent from 8.1 percent in February. March's rate matched the consensus projection. The unemployment rate is the highest since the same rate in November 1983.

Turning back to the payroll survey, job losses in March were widespread. The service-providing sector cut 375,000 jobs. In this sector, the largest job losses seen in professional & business services, down 133,000, and in trade & transportation, down 112,000.

The goods-producing sector gave pink slips to 305,000-worse than February's losses of 285,000. In the latest month, manufacturing and construction fell by 161,000 and 126,000, respectively. Natural resources & mining dropped 18,000.

On a year-on-year basis, nonfarm payroll employment growth slipped to down 3.5 percent in March from down 3.1 percent the previous month.

Wage inflation held steady in March as average hourly earnings came in at 0.2 percent in March. The consensus also had projected a 0.2 percent gain. The average workweek slipped to 33.2 hours from 33.3 hours in February.

On the news, equity futures rose somewhat as some had built in even worse numbers since Wednesday's ADP report. Nonetheless, job losses are remaining quite large, staying well over 600,000 in each of the last four months. Today's numbers clearly show the first quarter ending on a sour note. Looking ahead, there is not much for the consumer to be hopeful about to boost income and spending. Until the job cuts are less negative, a real turnaround in the economy is still months down the road.

Market Consensus before announcement
Nonfarm payroll employment in February plunged 651,000, following a decline of 655,000 in January and a fall of 681,000 in December. Job cuts in the latest month were widespread in both service-providing and goods-producing sectors. The soft labor market has weakened wage gains as average hourly earnings rose a modest 0.2 percent in February. Also, the average workweek was unchanged at an anemic 33.3 hours. From the household survey, the civilian unemployment rate surged further to 8.1 percent from 7.6 percent in January - hitting the highest rate in 25 years. Looking ahead, record high continuing unemployment claims indicate that the unemployment rate will rise even further in March.

Definition
The employment situation is a set of labor market indicators based on two separate surveys in this one report. The unemployment rate equals the number of unemployed persons divided by the total number of persons in the labor force, which comes from a survey of 60,000 households (this is called the household survey). Workers are only counted once, no matter how many jobs they have, or whether they are only working part-time. In order to be counted as unemployed, one must be actively looking for work. Other commonly known figures from the Household Survey include the labor supply and discouraged workers.  Why Investors Care
 
[Chart]
During the mature phase of an economic expansion, monthly payrolls gains of 150,000 or so are considered relatively healthy. In the early stages of recovery though, gains are expected to surpass 250,000 per month.
Data Source: Haver Analytics
 
[Chart]
The civilian unemployment rate is a lagging indicator of economic activity. During a recession, many people leave the labor force entirely, so the jobless rate may not increase as much as expected. This means that the jobless rate may continue to increase in the early stages of recovery because more people are returning to the labor force as they believe they will be able to find work. The civilian unemployment rate tends towards greater stability than payroll employment on a monthly basis. It reveals the degree to which labor resources are utilized in the economy.
Data Source: Haver Analytics
 

 

2009 Release Schedule
Released On: 1/92/63/64/35/86/57/28/79/410/211/612/4
Release For: DecJanFebMarAprMayJunJulAugSepOctNov
 


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