Last month, the chattering classes were sent into a tizzy by the negative surprise from the March jobs report. Economists had expected that job creation would be about double the 88,000 that was reported, because of the relative strength of other data. Our advice in this space then was to sit back and wait for revisions:
The report is not as bad as it looks. Upward revisions to previous months added a whopping 61,000 jobs, so the positive jobs news is closer to 150,000 for the first quarter as a whole. If one adds the fact that upward revisions are becoming the rule rather thant the exception, it is possible that March will end up looking as anticipated in the fullness of time.
Fast forward to today, and March was revised upward to 138,000, and the April number was 165,000, pretty close to double the initial estimate for March. Putting it all together, it seems clear that the bones of the data are pretty healthy. Initial claims for unemployment insurance are down to near their pre-crisis levels, layoffs are at a twelve-year low, auto sales have headed back to almost normal levels, and growth is inching up. There is even life in housing.
This means, of course, that the sequester is not crushing the economy. In addition to making the administration’s apocalyptic rhetoric look foolish, there was another bit of bad news for the Obama administration in the data. The work week dropped pretty sharply in April, from 34.6 hours per week to 34.4 hours per week. This may be the start of a trend that heads significantly south from here.
Anecdotally, employers are cutting back on workers’ hours, trying to get below the 30-hour threshold in anticipation of the arrival of Obamacare in its full glory, which will leave part-time workers unaffected. Buried in the industry detail, the two segments of the labor market most likely to be impacted by Obamacare, retail trade and leisure and hospitality, both posted noticeable work-week declines. This may be a blip, or it may be the start of a large shift that will significantly harm workers.
If it continues, we may well enter uncharted territory, where jobs are created but economic growth remains week, because so many existing workers are seeing their work week cut.