Payrolls Everywhere Else

At first glance, the numbers weren’t bad. Maybe even borderline OK. The headline payroll figure nearly doubled consensus estimates, even better when taking into account only private payrolls even after ADP earlier this week had reported the opposite. Topline, the Establishment Survey gained 379,000 in February 2021, of which 465,000 were reportedly added to the private economy (government employment shrank by 86,000).

The problem, such that it is one, the combined leisure & hospitality industry was responsible for 355,000 of the increase, leaving not much from everywhere else. These people absolutely need to get back to work after having been shut down for nearly a year due to both economic and non-economic reasons, and the increase due to more rational government stances is an unqualified welcome development.

However, it shouldn’t account for the vast majority of any gains that are less than, say, 1 million or better (like the early parts of the reopening last year). If non-economic re-reopening is adding ~350k back to the labor market, then if the economy had been otherwise recovering there’d have been as much or more gained from the rest of it spun off by legit growth.

These slim pickings are instead why the labor force has contracted slightly since the apex of the rebound in June 2020. After figuring more than 400k former workers left the labor market in January, despite a “good” payroll report in February only 50k came back. There remain 4.3 million fewer workers counted as in the labor force, a gigantic drop that hasn’t improved over the last six months, half a year, since peaking last August.

And with only 50k added back to it, with a more modest (compared to the CES) 208,000 increase in the Household Survey the unemployment rate ticked down to 6.2% from 6.3%. Even at slow speed, more jobs than potential laborers; those officially not in the labor force add up to nearly 101 million yet again.

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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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