The Real Unemployment Rate (For March)

For a few months I'd been pointing out the differences between the government reported unemployment rate and the real economic conditions on the ground including the ADP private sector jobs report suggesting that the government numbers would eventually be revised higher. The most recent jobs report was the one that pulled it altogether. Blowout jobs growth and positive revisions from prior reports. Here are some of the key takeaways as we wade into the "real" unemployment rate. 

  • Headline unemployment rate 4.1% (flat for five consecutive months maintaining the lowest unemployment rate in 17 years and three months)    

  • 313,000 jobs added in February (best February since 1999 - mirroring the ADP information) 

  • Two consecutive months of massive upward revisions to prior months (+54,000 in February, +172,000 over the past two months) 

  • Biggest one-month improvement in the labor participation rate in years (which is why the unemployment rate is flat) 

Top industries for hiring:    

  • #1 Construction (added 61,000 jobs)    

  • #2 tie Professional & Business Services / Retail (added 50,000 jobs)     

  • #4 Manufacturing (added 31,000)  

  • #5 Financial services (added 28,000 jobs)     

The breadth of the job growth continues to paint a broad based successful story of our economy and the incredible manufacturing resurgence story continues to play out. None the least of which is the continued resurgence of American manufacturing. Over the past year we've added more than 200,000 manufacturing jobs and there's seemingly building momentum.   

Now for the real unemployment rate once underemployed and long-term unemployed people are accounted for.    

  • Actual: 8.2% down from 8.6% (year over year)    

Three additional relevant points:       

1. When the long-term unemployed & marginally employed are factored in - the real unemployment is double the base reported rate      

2. 1.4 million are long-term unemployed, 5.2 million are underemployed (part-time seeking full-time work) & 1.6 million are marginally attached to the workforce    

3. The labor participation rate improved to 63% (+.3%) best since September 

It's likely that we're starting to see the impact of tax reform showing up in the economy and specifically the ramping up of hiring by companies across the country. 

In part two we'll look at the demographics of the unemployed...   

Brian Mudd

Brian Mudd

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