Analyzing the Jobs Report, March 2016
The US Labor Department releases the jobs report on the first Friday. We’re here to summarize, dissect, and analyze what it all means.
Despite a rocky first quarter that saw the stock market limp to its worst start in history, the US economy continues to defy expectations, adding 215,000 jobs in March. Unemployment rose to 5% from 4.9% in February, though that was attributed to more entrants to the workforce with many aiming to take advantage of the 5.5 million openings that have been available since the start of January.
Here are some additional nuggets to note from the report as well as ancillary analysis:
What’s up
According to the report, healthcare, construction, and retail saw rises in hires with 48,000, 37,000, and 37,000 new jobs created respectively. Healthcare will continue to rise as America’s baby boomer generation ages and requires the services of medical professionals including nurses, administrators, and support staff. Construction and retail are key to note as well, since they indicate new capital interest and an uptick in consumer spending. The report also shared that employment rose by 25,000 in drinking places, which presumes establishments like bars and restaurants. We can conclude that perhaps more people are celebrating their new hires.
What’s down
Down sectors include manufacturing and mining, which lost a combined 41,000 jobs. According to the Department of Labor, mining as a whole has lost 185,000 jobs since September 2014. These numbers are in line with the hobbling energy sector, which we get into a little more detail below.
What stayed the same
Industries staying the same in March include professional services, wholesale trade, information, government, and transportation stayed flat. We presume this is due to layoffs and overall caution in the market. We cover this below regarding technology hubs.
Wages increased 0.3%
That brings the 2016 total to 2.3% overall. While economists expected closer to 0.1%, this suggests that employers are willing to pay more for labor. Average hourly payrolls for increased to $25.43 per hour in March, while private sector/non-supervisor wages increased to $21.37. In the San Francisco Bay Area, we can expect these numbers to be higher given the high cost of living.
The labor force participation rate is now 63%
The amount of people participating in the workforce, either seeking work or at work is creeping up, suggesting that individuals are more encouraged by rising economic indicators. Back when the Great Recession hit, numerous individuals were left out of work for a prolonged period of time, and some had dropped out entirely. This suggests that some are returning.
Tech hubs are where the buzz is
Technology continues to be the leader in areas where the recovery has been the most successful. According to this graphic shared by The New York Times, the best cities for work include Denver, San Jose, Dallas, and San Francisco. Albert’s List serves a few of these regions and as the weeks pass, continues to see posts in all companies, from startups to mid-size companies notably looking for technical and sales talent.
…but there’s calamity too
We heard in February about Silicon Valley-based Zenefits and the scandal brewing from office activities. That resulted in layoffs affecting their enterprise team as they sought to lean out. As we moved forward in March, there were further layoffs, notably from firms like Pebble (Smartwatches, 25% reduction), Boeing (4,000 cuts), SurveyMonkey (Surveys, 100 cuts), and Optimizely (web optimization). This also follows the notable demise of some sharing economy startups as well, including SpoonRocket, which delivered healthy meals. With new ideas coming out of Silicon Valley on what seems like a weekly basis, many of these individuals should be able to find work easily.
Energy continues to hobble
There are lagging areas of the economy as well. The energy sector continues to struggle with layoffs as the cost of energy continues to drop due to increased supply. For example, the state of Wyoming continues to see layoffs from all of its major energy companies and unemployment has risen to 5%. Furthermore, coal shipments have hit all time lows while acquisitions and buyouts are being abandoned.
Concluding Thoughts
The themes that we started out the year with continue to manifest themselves, notably with the drop in energy, tech industry volatility, and overall continued increase in jobs. Though corporate profits continue to fall, the continued hiring suggests that either (a) there may be a reduction soon or (b) there is an expectation that increased workforce means these numbers will turn around soon. We’ll keep an eye on this for the next few months and quarters to come.
As a whole, job seekers should still continue to be wary about the market. With professional services and information (the leading types of roles on Albert’s List) staying flat, those in the market and in jobs should continue to network and build their skills at work.
Come back next month as we cover the April jobs report on May 6.
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