As you can see,
yearly employment trends remain positive, while monthly data are all
over the map.
Note that the year-over-year trend has been relatively steady with a
modest upward bias. That trend remains intact and is consistent with my
2.0%-2.5% GDP growth rate for 2012. If one converted that
year-over-trend to monthly employment growth, it would mean net
private-sector job growth of 2.2 million per year, or 185,000 jobs per
month. That was the overall rate we saw in 2011.
Meanwhile the monthly growth rate has been as low as 0.6% and as high
as 3.0%. January's 3.0% monthly growth was probably a weather-related
fluke. That annualized monthly growth rate is considerably higher than
long-run GDP growth. That is why every economist was convinced that
March's job growth would be slower than January's and February's; we all
just misjudged the magnitude.
Most Other Employment Data Points Stronger Than Friday's Official Report
The main reason most economists were looking for a more modest decline
was that so many other indicators of the job market looked so positive. The ADP report,
from the firm that actually prints a large portion of payroll checks,
showed far stronger private-sector growth of 209,000 jobs in
March versus the 121,000 private-sector jobs that the official
government report showed.
Also, initial unemployment claims continued to fall throughout most of March. The employment portion of both
the manufacturing and non-manufacturing reports also showed strong
improvement during March. Finally, the Challenger Gray & Christmas
layoff report continued to show falling numbers of large-entity layoffs.
Therefore, I believe the employment situation isn't slowing as quickly
as the most current official report suggests, but neither is it as
strong as January's whopping 3% growth rate.
Gap Between GDP Growth and Employment Got a Little Too Wide
Even when viewed on a year-over-year basis, employment growth has been
trending a bit higher than GDP growth. Normally, GDP grows just a little
faster than employment (because of improved productivity). It was this
data that likely caused Bernanke in late March to question the
sustainability of monthly employment growth.
My current estimates for the first quarter now suggest that GDP and
employment have pulled more into line.