Friday’s employment report from the Bureau of Labor Statistics (BLS) rounds out the picture of payroll job growth for the first quarter of 2016. Nonfarm payroll job numbers increased 215,000 in March, above expectations (+210,000). Private payrolls grew 195,000, and the unemployment rate rose to 5.0%. The labor force participation rate ticked up 0.1 percentage point to 63.0%. Nonfarm payroll job growth was revised up from 242,000 for February to 245,000, and down a combined 1,000 for January (third estimate) and February (second estimate).

Source: BLS, BEA, Bloomberg Econoday

LABOR TRENDS FOR WORKERS, JOB SEEKERS AND FAMILIES

The labor force participation rate remains subdued, even among prime-age workers

The labor force participation rate remains significantly below its recovery start, and despite an uptick in recent months, is still down 2.7 percentage points at 63.0%.

The rate is also relatively low for 25-54 year olds, down 1.5 percentage points to 81.4% compared to the start of the recovery.

Specifically, labor force participation is down among Americans under 60 years old

When broken down into five-year age cohorts, only workers age 60 and older have seen their participation increase since the start of the recovery.

By comparison, workers age 59 and younger, particularly ages 16 to 19 and men ages 20 to 24, have seen their workforce participation decline significantly over the course of the recovery.

Full-time employment remains subdued as a share of total employed

The share of the employed that are working full-time is still more than a percentage point below pre-recession levels, even though the number of full-time jobs finally passed its pre-recession peak in August 2015.

Part-time jobs jumped during the recession and remain elevated by more than 3 million compared to pre-recession levels. As a share of the employed, part-time work is up 1.5 percentage points compared to its pre-recession level.

Average monthly job growth slowed in 2015 and the first quarter of 2016

Over the past 12 months, 2.8 million nonfarm payroll jobs were added.

Nonfarm payroll job growth has increased to an average of 209,000 jobs per month over the past 3 months, lower than the average of 234,000 jobs per month over the last 12 months.

It would take nearly 5.8 million more private-sector payroll jobs added in the remainder of 2016 to close the growth gap in private-sector jobs between this recovery and the average post-1960 recovery, or roughly 644,000 new jobs per month.

Long-term unemployment remains elevated

It takes a median 80 days for the jobless worker to find a job or leave the workforce. The average is worse—199 days.

As a percent of the jobless, the share of long-term unemployed (27 weeks or more) remains elevated at 27.6% and nearly double its 40-year, pre-recession average of 14%.

CONTEXT

This month’s household employment numbers reveal that the number of workers employed part-time for economic reasons rose 135,000 after remaining unchanged in February. By educational attainment, increases in employment and the labor force occurred among persons with less than a high school diploma and persons with a bachelor’s degree and higher, while decreases occurred among high school graduates and those with some college or an associate’s degree.

• BLS also reports from the establishment survey that goods-producing jobs fell by 4,000 in March, with construction job growth (+37,000) a bright spot among payroll declines of 29,000 in manufacturing and 12,000 in mining and logging, which include oil and gas extraction jobs. Private service-providing jobs grew by 199,000 with the largest gains in retail trade (+47,700), healthcare and social assistance (+44,000), and leisure and hospitality (+40,000). The Challenger Job Cuts report for February revealed that U.S. employers announced 48,207 payroll cuts, roughly one-fifth lower than February’s 61,599 job cuts.
• ADP’s National Employment Report estimates that private-sector employment increased 200,000 in March, with the largest employment gains in the service-providing sector, rising 191,000. Goods-producing jobs increased by a mere 9,000. ADP’s employment numbers, though useful, are not necessarily a reliable predictor for actual payroll jobs numbers released by the BLS.
• The ISM manufacturing survey for January indicated that the manufacturing sector expanded for the first time in the last 6 months. However, the employment index fell back 0.4 percentage point further into contractionary territory at 48.1%.

THE BIGGER PICTURE

Though the jobs numbers released last Friday help round out the first quarter of 2016, there’s still much to learn about how 2015 set the tone for 2016. According to a recently released Census Bureau report, in 2015 the United States ranked the 48^th “oldest” nation in the world out of 228 countries, but is expected to drop to a “relatively youthful” 85^th place by 2050, with American seniors comprising nearly one-fifth of Americans by then. Japan is expected to retain first place over the same time frame, with its share of people age 65 and older rising from over a quarter of their population to two-fifths by 2050.

• For all of the concern about demographic shifts, particularly young and lower-income consumers “punched above their weight class” in the last several months of 2015, according to data from J.P. Morgan Chase & Co. Institute. As noted by the Wall Street Journal, government data also shows that consumer spending more than compensated for weak trade and investment in the final quarter of 2015.
• The Federal Reserve has previously hinted that a move on the target federal funds rate could occur as soon as late April, with the Federal Open Market Committee scheduled to announce its policy recommendations on April 27. However, FOMC projections and market expectations anticipate only two rate increases this year. FOMC projections for real GDP growth in 2016 and 2017 slowed in the March projection to 2.2% and 2.1%, respectively, compared to the previous December projection of 2.4% and 2.2%, respectively.
• In the meantime, Atlanta Fed’s GDPNow forecast for U.S. first-quarter real GDP growth is 0.7% as of April 1, down from 1.4% on March 24 following last Monday’s release of personal income and outlays by the Bureau of Economic Analysis. Wells Fargo Economics Group estimates first-quarter real GDP growth of 1.4%. GDP data for the first quarter of 2016 will be released at the end of this month on April 28, 2016, at 8:30 a.m. ET.

The next BLS employment situation report for initial April employment numbers and revisions for February and March data are scheduled for release on Friday, May 6, 2016, at 8:30 a.m. ET.