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Employment Report (March, 2008)

Mon, Apr 7 2008, 15:21 GMT
by BBVA Bancomer Team

BBVA Bancomer

• Nonfarm payrolls fell 80K in March, posting their third consecutive decline. Figures for the prior two months were revised down by a cumulative 67K. Although our scenario of 95K job losses in March was more pessimistic than consensus, the revisions to the first two months of 2008 added up to an even weaker labor market than predicted

• Private employment decreased 98K in March, registering its fourth consecutive decline

• According to the household survey, the unemployment rate edged up to 5.1% in March from 4.8% in February, reaching its highest since September 2005. The labor force participation rate rose to 66.0% from 65.9%

Bottom Line. The relatively moderate labor contraction -when compared to previous recessionary periods- supports a short-lived and mild recession. This is likely the result of a significant reduction in the volatility of the business cycle (see our Weekly analysis of January 14th 2008, “Growth Deceleration and the Current Business Cycle”).

On the positive side, education and health, and leisure and hospitality will keep adding jobs to the private services sector. The health sector has been boosted by an aging population, whereas the strength of leisure and hospitality may be benefiting from greater tourism activity. In addition, population trends will support a sustained growth in government employment in health and education services. However downside risks persist. Employment in the goods producing sector will continue declining due to the housing meltdown which has not bottom yet and poses significant contagion risks to private services employment. Moreover, continuing financial markets strains could lead to a more prolonged period of credit tightness while employment in general public administration could decline with the business cycle. In addition job contraction in the manufacturing sector is likely to continue given ongoing structural trends.

• Download full report with charts

Published on  Mon, Apr 7 2008, 15:24 GMT