Economy Keeps Cranking Out Jobs - April 8, 2019

On the first Friday of every month, at 8:30 a.m. ET, economists anxiously await the jobs’ report from the U.S. BLS. Over a longer view, an economy must generate jobs, period. But the monthly ritual probably gets too much attention. In the spirit of posting the numbers, the U.S. BLS reported that nonfarm payrolls rose by 196,000 (whew) in March and the unemployment rate held at 3.8%.

Why the sigh of relief? In February, the economy generated only 20,000 jobs, which was revised up to 33,000 in Friday’s report. And that’s where the problem lies with the monthly releases.

In January, payrolls rose by 312,000 – jubilation. In February, we’re up just 33,000 – concern. In March, we’re up a solid 196,000 – relief.

The numbers can be volatile on a month-to-month basis. We’ve seen it before and we’ll see it again. Monthly noise, compliments of data gathering techniques and quirks in the models, are likely the reason. If the economy is expanding, businesses will hire.

Maybe a better way to review the data, and one that would smooth out some of the monthly volatility, would be a three-month average.

Sure, growth has slowed over the last three months –180,000 averaging January, February, and March. And it slowed in the prior period. But economic growth has moderated, too. Yet, overall numbers are healthy.

Here’s another look – total nonfarm payrolls since January 2005. Total employment is just north of 150 million today. If we look carefully at the growth over the last decade, we can see it’s not a perfectly straight line, but the trend has been to the upside without drawing attention to the monthly volatility.

It’s likely to continue to see gains until economic growth stalls and a recession ensues.