In March nonfarm payrolls declined by 80,000. It’s the third consecutive contraction. February and January data were significantly revised down (table 1).
Employment grew only in service providing industry. This sector of economy created 13,000 jobs due to health care, educational and food services industries, as well as public administration. In health care and social assistance sector employment increased by 33,500 m/m, which has been the highest rate among the components of “non farm payrolls”. Jobs were created in ambulatory health care, hospitals and social assistance spheres. Unemployment rose only among nurses. In the end health care and social service employment increased a bit less than half a million in the last twelve months.
Employment growth in food services sector has been accelerating. Café’s and restaurants added 23,400 jobs in March which is suggested by the fact that N. America remains one of the most popular continents for European and Asian tourists and the weakness of the USD. State and local governments notably increased the employment in the public education programs sector, which was completed by a creation of ten thousands jobs by public administration institutions. On the whole federal and local governments managed to provide workplaces for 18,000 Americans.
Increases in the above mentioned industries were partly offset by the reduction of jobs by consulting services and retail trade industries. Stores and supermarkets laid off 12,400 employees. The main sources of reduction were general merchandise, furniture and building materials stores. Building materials and garden supplies stores fired their employees more willingly than others. Companies and organizations providing employment services shed 41,800 jobs. Unemployment again increased among real estate specialists.
Manufacturing sector shed 48,000 m/m and 310,000 y/y jobs in March. Most of job losses occurred in wood, motor vehicle and parts production and printing sectors. Motor vehicles’ and parts’ producers were the worst performers in the US manufacturing sector. They fired 23,300 employees. Employment in auto industry tumbled down by 78,400 over year, due to high fuel prices and sales slowing down.
Numerous bankruptcies of mortgage companies that were providing loans to people with poor credit history and without proved incomes, as well as the drop of the new home sales, ensured an employment decrease by 51,000 in construction industry (chart 1). In the end, nearly 356,000 specialists of construction sector lost their jobs during the last twelve months.
Due to the contraction of payrolls unemployment rate edged up by 0.3% to 5.1%. Moderate inflation is most likely slowing down the pace of wages growth. In particular, average hourly earnings rose by 3.6% over the year, which is 0.6% lower than in the same period of last year (chart 2).
Non farm payrolls remain below the zero level. Crisis on real estate market left a mark on construction, and therefore on this sector’s unemployment rate. The absence of the real estate market, which has been the main driver of the economic growth in the last years, will complete or at least sharply reduce the pace of unemployment fall. Moreover, wages growth reduced significantly, whereas unemployment rate remained at low level. The only source of employment growth was service providing industry, with the exception of retail trade. However, deceleration of the US economy will force service providing companies and organizations to reduce the staff or at least stop hiring new employees. On the basis of the above mentioned we think that nonfarm payrolls reduction might significantly moderate the pace of consumption spending and inflation growth.
US ECONOMIC INDICATORS
Table 1
|
Labor market, m/m
|
2008
|
|
2007
|
|
Mar
|
Feb
|
Jan
|
…
|
Mar
|
Feb
|
Jan
|
|
Nonfarm employment, 000’
|
-80
|
-76
|
-76
|
|
177
|
25
|
126
|
|
- Manufacturing
|
-48
|
-46
|
-35
|
|
-35
|
-27
|
-18
|
|
- Service providing
|
13
|
6
|
-7
|
|
137
|
150
|
115
|
|
Labor force, 000’
|
410
|
-450
|
-42
|
|
159
|
-233
|
249
|
|
Average hourly earnings, y/y
|
3.6
|
3.7
|
3.7
|
|
4.2
|
4.1
|
4.2
|
|
Weekly hours worked
|
33.8
|
33.7
|
33.7
|
|
33.9
|
33.7
|
33.8
|
|
Participation rate, %
|
66.0
|
65.9
|
66.1
|
|
66.2
|
66.2
|
66.3
|
|
Unemployment rate, %
|
5.1
|
4.8
|
4.9
|
|
4.4
|
4.5
|
4.6
|
Source: Bureau of Labor Statistics
Chart 1
Source: Bureau of Labor Statistics
Chart 2
Source: Bureau of Labor Statistics
