March Job Market Updates: Shaker’s Take

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This is going to be the toughest article I have ever written.

Over the past few years I have provided monthly updates on the jobs report as a means for all of us to watch not necessarily the monthly fluctuations in job growth, but to evaluate trends and have a means for human resources and talent acquisition practitioners to forecast their overall tactics and strategies for maintaining workforce capacity for their companies.

Today’s report is only a partial view, up to March 12, of the seismic changes we are currently experiencing. It is now time to re-forecast for the short-term while identifying adjustments that can be made to stabilize the future.

After a ten-year expansion which added 22 million jobs to U.S. payrolls, the coronavirus has brought our economy to a near, though not complete, standstill with the worst month for job losses since the 2007-2009 recession.

Every month the BLS Jobs Report covers the 28 to 31-day period (depending on the number of days in the reporting period) ending during the second week of the month. Therefore, the newly released jobs report for March only covers the days before the initial stay-at-home orders and government-mandated shutdowns began to cover much of the nation on March 13. The April report, which will be released on May 8, will document more completely the ramifications of this crisis.

As with all job reports, the crucial facts are in the details. As in all periods of economic activity, some industries will see growth in response to market factors, while others will experience flat or decreasing hires.

For the March report, the sectors seeing growth at the beginning of the month were Government jobs up by 18,000 with 17,000 of those jobs for the Census count, Information/Tech up by 2,000, Wholesale Trade up by 900, and Utilities up by 800.

The sectors experiencing losses in the first half of the month were Financial Activities down 1,000, Transportation and Warehousing down 4,900, Mining and Logging down 7,000, Manufacturing down 18,000, Construction down 29,000, Retail Trade down 46,200, Professional and Business Services down 52,000, Health Care and Social Assistance down 61,200, and Leisure and Hospitality down 459,000.

Revisions for January and February were also reported. January was down 59,000 to a revised job growth of 214,000 while February saw an increase of 2,000 to 275,000, for a net loss of 57,000 jobs for the previously reported two months.

Another indicator of where strengths might exist in the future comes from the Institute for Supply Management (ISM). Five of 17 industries reported growth for business activity in March: Health Care, Food Service, Construction, Public Administration, and Finance/Insurance. The ISM reported their general index for March at 52.5% after a 57.3% reading in February. Readings above 50% indicate expansion. ISM reported new orders for manufacturers fell 10.2 points to 52.9%, while the gauge of business activity fell 9.8 points to 48%. The ISM employment barometer fell 8.6 points to 47%.

Another indicator to watch is job postings. EMSI reported a 32% decline in job postings for the week of March 23 compared to the weekly average for job postings in both January and February 2020.

Nevertheless, there are certain categories with significant growth in job postings. Online shopping had a 75% increase in March compared to January and February. Insurance carriers were up 27%. Hardware Stores were up 21%. Freight/Warehouse/Package Handlers were up 23%.

In the meantime, in conjunction with the job report, we must look at the weekly number of unemployment claims as an indicator of the direction of short-term job growth and losses. In the last two weeks, 10 million people have filed for unemployment benefits. Just a month ago, new claims were about 50,000 per week.

The states with the biggest increases in jobless claims last week were California (878,727), Pennsylvania (405,880), and New York (366,403) based on adjusted data, though the level of claims might be underestimated with some states having trouble with the large influx of applications.

The unemployment rate for the reporting period, up to mid-March, jumped from 3.5% to 4.4% and is expected to increase in future reports. Bloomberg Economics projects the rate rising to 15%, while the Federal Reserve Bank of St. Louis is predicting it may hit 30% in the next three months. Oxford Economics projects an unemployment rate of 16% by May and a decrease of 27.9 million jobs. That job loss would be more than double the 8.7 million jobs lost over a 25-month period during the 2007-2009 recession. You can see at this point projections are scattered high and low and require more data to become more precise.

We will look at more data next month. In the meantime, if you need more information, contact us at info@shaker.com, and of utmost importance, take care of yourselves, your family, and your friends.

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Mike Temkin

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