Employment: Goods Sectors Drive Growth

Bottom Line:  Employment rose more than expected in March, and there were upward revisions to February and January data.  Leisure and hospitality sector hiring led, but construction and manufacturing jobs accounted for much of the surprise.  Education-related jobs were also stronger than expected.The unemployment rate fell a two-tenths to 6.0%, even as the workforce expanded.  Long-term unemployment continued to rise, as did the mean duration of unemployment.  But those working part-time for economic reasons fell.Finally, average hourly earnings edged lower as many of the jobs gained in the leisure and hospitality sector were lower-paying ones. That said, the job gains in construction and manufacturing were accompanied by longer hours.  And the index of aggregate weekly hours in those sectors was higher.
 
Overall, this report was strong with the upside surprise driven by manufacturing and consultation, two sectors that remain important drivers of the economic recovery.  Lower-paying jobs in the services sectors are returning amid more reopenings, mostly as expected.  That said, the risks of long-term unemployment continued to grow in the first quarter of 2021.  The core driver of growth remains the goods producing sectors -- the question that will likely be answered over the 2nd Quarter and into the 3rd:  how much will goods consumption fall as consumers shift spending back towards services amid more reopenings?   For now, good producing sectors are hitting on all cylinders and driving growth.

Payroll Employment rose by 916k in March, compared with market expectations for an increase of 200k. The prior 2 months were revised, higher in February by 89k and higher in January by 67k.  Government jobs ROSE by 136k. Consequently, private sector jobs ROSE by 780k.   Overall employment is now -4.5% BELOW its year-ago level. Over the past 12 months, 6,720k jobs have been shed.

In March, the job gains were in:

Jobs were shed in Information (-2k).The Unemployment Rate FELL by 0.2 percentage points in March to 6.0%, compared with market expectations for a small increase to 6.3%.  Household employment rose by 609k while the labor force increased by 347k, resulting in a decrease in the number of unemployed of 262k.The Labor Force Participation Rate ROSE by 0.1 percentage points to 61.5%.

The Employment-Population Ratio ROSE by  0.2 percentage points to 57.8%.The number of people Working Part-Time for Economic Reasons FELL by 182k to 5,804k. while Long-Term Unemployment ROSE by 70k to 4,218k (accounting for 43.4% of the unemployed),  while the Mean Duration of Unemployment ROSE by 2.1 weeks to 29.7 weeks. There are now 9.7 million people officially unemployed. In addition, there are another 6,850k people who say they want a job but are not currently looking for one.  Finally, 5,804k people are working part-time because of slack economic conditions.The Index of Aggregate Hours ROSE by 1.5%, combining the solid gain in private payroll employment and the longer workweek.

Hourly Earnings FELL by 0.1% in March, below market expectations of 0.2%. Hourly earnings are now 4.2% ABOVE their year-ago level.Weekly Earnings  ROSE by 0.7%, the result of the change in hourly earnings and a longer workweek. Weekly earnings are now 6.7% ABOVE their year-ago level.The Average Workweek ROSE by 0.3 to 34.9 hours, ABOVE the market consensus at 34.6 hours.