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Friday, April 07, 2023

Comments on March Employment Report

by Calculated Risk on 4/07/2023 09:20:00 AM

The headline jobs number in the March employment report was close to expectations, however employment for the previous two months was revised down by 17,000, combined.  The participation rate and employment population ratio increased, and the unemployment rate decreased to 3.5%.

Leisure and hospitality gained 72 thousand jobs in March.  At the beginning of the pandemic, in March and April of 2020, leisure and hospitality lost 8.2 million jobs, and are now down 368 thousand jobs since February 2020.  So, leisure and hospitality has now added back about 96% all of the jobs lost in March and April 2020. 

Construction employment decreased 9 thousand and is now 280 thousand above the pre-pandemic level. 

Manufacturing lost 1 thousand jobs and is now 198 thousand above the pre-pandemic level.

In March, the year-over-year employment change was 4.15 million jobs.

Prime (25 to 54 Years Old) Participation

Employment Population Ratio, 25 to 54Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 participation rate was unchanged in March at 83.1% from 83.1% in February, and the 25 to 54 employment population ratio increased to 80.7% from 80.5% the previous month.

Both are at the pre-pandemic levels and suggest essentially all of the prime age workers have returned to the labor force.

Average Hourly Wages

Wages CES, Nominal and RealThe graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  

There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 4.2% YoY in March. 

Wages growth was strong last year in the March through July period, so year-over-year wage growth will likely slow further over the next few months.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"The number of persons employed part time for economic reasons was essentially unchanged at 4.1 million in March. These individuals, who would have preferred full- time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs."
The number of persons working part time for economic reasons increased in March to 4.102 million from 4.067 million in February. This is at pre-recession levels.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 6.7% from 6.8% in the previous month. This is down from the record high in April 22.9% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.5%). (This series started in 1994). This measure is below the level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.104 million workers who have been unemployed for more than 26 weeks and still want a job, up from 1.057 million the previous month.

This is at pre-pandemic levels.


The headline monthly jobs number was close to expectations; however, employment for the previous two months was revised down by 17,000, combined.   The headline unemployment rate decreased to 3.5%.

Overall, this was a solid employment report.