The Numbers Continue to Outpace Expectations “Groundhog Day” Style

The March jobs report says Brian Miller, CEO of Patrice & Associates Staffing & Recruiting continues to confound analysts who consistently underestimate the resilience of the business community.

Once again, analysts underestimated the labor numbers, and the market charged right past them. It’s been a “Groundhog Day” pattern for months now. Employers hired 303,000 people in March, surging past expectations of a more moderate increase. And the unemployment rate held steady at 3.8% according to the U.S. Bureau of Labor Statistics. Generally, economists deem anything below 5% a healthy job market.

CCG:    What is the explanation for this month’s job performance? 

Miller: That’s a straightforward question with a complex answer. First, even though month after month, the economy has posted more jobs than anticipated, 2023 saw a deceleration in the pace of that growth. Second, fewer companies are actively hiring, especially those in industries plagued by the effects of inflation and high interest rates. That explains why analysts keep waiting for a down-shift.

CCG: Are more companies cutting back their staff in addition to slowing hiring? 

Miller: Some employers may not be hiring, but most with the exception of a few high-profile cases, aren’t trimming their current staff. They fear they won’t be able to replace team members once the economy shifts and business picks back up. Combine that with many companies being short-staffed and a very low unemployment rate, and you’ve got hiring challenges even with the random layoffs.

 CCG: It sounds like anyone hiring in the near term will need a good recruiter.

Miller: If they are interested in efficiencies, they will. Despite the slowdown in the pace of hiring, employment continues to grow at a rate surpassing the historical averages. It’s a strong labor market, albeit different from 2022 and early 2023. Even with companies slowing down their hiring, those who are hiring are not receiving the volume of applicants and resumes like in the old days. Quality candidates more and more come through placement companies like Patrice & Associates.

CCG: Has the economy or other forces caused more people to enter the labor market? 

Miller: You’re asking about the labor force participation rate (LFPR). As in the months preceding, this metric remained virtually unchanged at 62.7% in March. In fact, both the LFPR and the 60.3% employment-population ratio (EPR), which measures the civilian labor force currently employed against the total working-age population, have not changed much all year. These are key statistics we use to gauge the level of participation in the labor market. To answer your question, the vast majority of people who have left the workforce have not jumped back in.

CCG: Did any specific sectors lead the way in March’s performance?

Miller: A few sectors were standouts, including healthcare, government, and leisure/hospitality a Patrice & Associates sweet spot. The healthcare sector added more than 72,000 jobs, and employment in government increased by 71,000. The hospitality sector onboarded 49,000 jobs and has returned to its pre-pandemic February 2020 level. Over the prior 12 months, job growth in the industry has averaged 37,000 per month so you can see March 2024 was a leap.

CCG: Hospitality always seems to be one of the top industries for Job Growth. Are other forces at play?

Miller: In addition to adding new jobs, the industry’s high turnover rate plays a role. Our clients routinely seek our help in filling these jobs because in our tight labor market, companies simply cannot efficiently or effectively fill jobs through traditional means like advertising, job boards, and word-of-mouth. They may think those methods are less expensive, but the cost of an unfilled chair in terms of productivity and the cost of a bad hiring choice far exceed the fees associated with professional placement. Plus, recruiters have access to more qualified potential candidates, which dramatically expands the labor pool for HR managers.

CCG: What other sectors of your business showed increases in March? 

Miller: In addition to an overall improvement in hiring from restaurant concepts and hotels seeking managers and executives, we also saw increased demand for talent in non-service-based businesses. Those include niches like construction and engineering, two of the many diverse industries we serve to help companies find top talent. In March, construction added 39,000 jobs, about double the monthly gain of 19,000 over the prior 12 months.

CCG: Are there any other factors to watch?

Miller: One noteworthy trend to watch is the recent 25% increase from $16 to $20 in the California minimum wage. This has caused leading fast-food industry companies to lay off workers and increase prices. Not only are customers not happy about it, but the increase could also have long-lasting effects on the state’s already high unemployment rate, which exceeds the national average.

CCG: How did the month shape up in Canada?

Miller: The Canadian unemployment rate rose to 6.1% in March, according to Statistics Canada. Losses were in the scientific and technical sectors. However, the losses were partially offset by gains in healthcare and social assistance. Economists anticipate that the Canadian unemployment rate may reach a peak of 6.5% before beginning to decline. This decline is expected to be influenced by potential rate cuts from the Central Bank of Canada later this year. Such monetary policy measures are typically aimed at stimulating economic activity and reducing unemployment levels.