April 4, 2008 (Jobs Byte)
Economy Loses 80,000 Jobs, Unemployment Jumps to 5.1 Percent
"The private sector is shedding jobs at the rate of almost 100,000 per month."
The establishment survey showed the economy losing 80,000 jobs in March, the third consecutive month of job loss. The private sector lost 98,000 jobs, the fourth consecutive decline in private sector employment. Overall, the private sector has lost 296,000 jobs over the last three months, a decline of 97,000 per month. Not surprisingly, the weakness in the labor market is also affecting wage growth. Wages grew at a 3.8 percent annual rate over the last quarter, below
the rate of inflation and roughly the same as the 3.6 percent growth
rate over the last year. The household survey showed a 0.3 percentage point jump in the unemployment rate to 5.1 percent, while the employment population ratio (EPOP) fell to 62.6 percent, the lowest rate since March of 2005.
The job loss in the establishment survey was widely spread across sectors, although construction and manufacturing continue to be hardest hit, shedding 51,000 and 48,000 jobs, respectively. Both residential and non-residential construction are now reducing payrolls, as overbuilding in the non-residential sector is leading developers to cut back in this sector also. Construction employment is down by 182,000 since November and by 356,000 (4.6 percent) over the last year.
Manufacturing employment is down by 151,000 since November and by 310,000 (2.2 percent) over the last year. The auto sector has been especially hard hit, losing 47,500 jobs since November and 95,000 (9.3 percent) over the last year, although this loss is somewhat inflated by a parts strike last month. The apparel and textile sectors also continue to be big losers, shedding 19,700 jobs since November and 45,700 jobs (8.2 percent) over the last year.
The retail sector lost 12,400 jobs in March and has lost 100,000 since November. Employment in the temporary help sector, which is often an indicator of future job growth, fell 21,600 in March and is down by 55,200 since January. The health care and restaurant industries are the only parts of the private sector with strong job growth, adding 22,800 jobs and 23,400, respectively.
The job growth in the restaurant sector may be an illusion. Over the last four months, the Labor Department has shown a gain of 58,100 jobs. However, the imputation for new firms not captured by the survey has been even larger at 85,000. The Labor Department is imputing jobs in this sector at close to the same rate as it did last year when the economy was growing much more rapidly, which means that it is likely overstating job growth.
The data in the household survey reinforce the bleak picture. Nearly every demographic group showed a decline in employment rates and a rise in unemployment rates. Black teens were among the hardest hit groups with their EPOP falling to 19.7 percent, the lowest level since it hit the same number in June of 2003, which in turn was the lowest level since March of 1984.
The unemployment rate for workers without high school degrees jumped 0.9 percentage points to 8.2 percent, the highest rate since October of 2004. The unemployment rate for workers with high school degrees rose by 0.4 pp to 5.1 percent, while the EPOP dropped by 0.6 pp to 59.1 percent. This is the lowest EPOP for workers with high school degrees since the Labor Department changed the coding in the survey in 1992.
The measures of unemployment duration all fell in March, which is consistent with many more workers becoming unemployed for the first time. The number of workers involuntarily working part-time continued its upward path and is now 591,000 above its year ago level. The percentage of unemployment attributable to people voluntarily quitting their jobs, a measure of confidence in the labor market, fell to 10.1 percent, the lowest level since March of 2004.
This report removes any doubt that the economy is in a recession, with the private sector now shedding jobs at a rate that may exceed 100,000 per month. With real wages declining, and the plunge in house prices destroying home equity at more than a $2.5 trillion annual rate, it is likely that the rate of job loss will accelerate in the months ahead.
Dean Baker is the Co-director of the Center for Economic and Policy Research. CEPR's Jobs Byte is published each month upon release of the Bureau of Labor Statistics' employment report. For more information or to subscribe by fax or email contact CEPR at 202-293-5380 ext. 102, or morgavan [at] cepr [dot] net.