Reopening 2

Last Friday’s March 2021 payroll report exceeded expectations in nearly every category. Analysts were hoping for something like the ADP’s private employment gains (+517k), somewhere in the ballpark of 550,000 to 600,000. Instead, the BLS thinks the whole economy had added between 803,700 and 1,028,300 (90% confidence).

This translated into the “headline” of +916,000, of which +780,000 in the private sector (the balance due to government re-hiring). Unquestionably a good month, however leaving unanswered the same question plaguing the economy since the recession began over a year ago: is it anything more substantial than reopening?

In March, there were two possible reopening categories at least when compared to February; the ever-present COVID restrictions plus literal rewarming, as in the Southern United States (primarily Texas) thawed completely from the February’s wintry messes.

Leisure and hospitality work led the gains last month, accounting for 280,000 of the overall. Construction picked up 110,000 while 76,000 came from local government school districts coming back toward normal.

While the BLS pointed out “widespread” employment gains in its press release, there’s a clear difference in accounting. That discrepancy remains in the same category – the labor force itself. Even though this “flood” of work coming back into the system, like last May and June last year the labor force itself rebounded far less; picking up only 347,000 in March remaining essentially flat to lower dating back to last summer.

The Labor Force Participation Rate stuck to 61.5%, up just 0.1 pts from February while down from 61.7% last August and 63.4% last January.

Like the aftermath of the Great “Recession”, we’re left to piece together just how much labor has truly been idled given this repeated asymmetry (real recoveries are symmetrical; labor use falls off sharply in recession and then recovers – in full – almost as quickly; that didn’t happen following 2008-09).

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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