The Bureau of Labor Statistics reported today that U.S. nonfarm payrolls, as measured by their survey of establishments, increased by a seasonally adjusted 180,000 workers in March.
Given the wild swings in these numbers recently, I’ve been recommending combining these BLS nonfarm payroll numbers with the Bureau’s separate household survey and the private estimates from
Automatic Data Processing. The BLS household survey implied 335,000 more people working in March, while ADP estimated 106,000 new private sector jobs. When you add to that last number the 23,000 new government jobs from the BLS payroll numbers, you get 129,000 total from the ADP estimates.
Regarding the BLS payroll numbers as the most reliable but letting the other two estimates inform the inference as well, we calculate
(0.8 x 180) + (0.1 x 335) + (0.1 x 129) = 190 thousand new jobs
That is, the strong BLS numbers are confirmed by the other two.
Particularly encouraging (and, to me, surprising) was the fact that BLS reported a 56,000 seasonally-adjusted improvement in construction employment in March, enough to erase the losses seen in this component in February.
At some point we might start to get concerned about these reports of high employment growth coinciding with anemic growth of real output, as they signal a slowdown in productivity gains. Productivity growth is by far the most important driver of the long-run growth of potential output.
But my main concern at the moment is not the growth of potential GDP, but rather whether the U.S. may fall below that potential and go into a recession. A decline in productivity can be a harbinger of a drop below potential output, if sales fall off before firms cut back on payrolls. Nevertheless, if employment does not fall, there will be no recession.
One can’t read too much into one month’s numbers. But we can still be a little bit cheered, can’t we?