US Labor Participation Rate Uptick

The March US non farm payroll came in at 192k just a nudge below consensus expectation of 200k. The whisper number going around the market was alot higher than 200k as it was looking for revisions and catch up from the bad weather seen from December 2013 to February 2014. Major indexes initially had an uptick following the report however once the market opened and selling on the NASDAQ overtook any initial optimism. By 4pm the market settled down across the board, although internal indicators did not shows fear rise, VIX only had a minor bump.

 2 major highlight of the NFP report are manufacture employment weakness and flat line of the labor participation rate in 2014:

1. The continual weakness in Manufacture employment.

This is one symptom of the structural change seen in the US economy over the last 2 years. The recovery post the 2000 tech bubble is known as the jobless recovery, but manufacture job growth was anemic then and it is still post the 2007 depression.

A number of research and signs point to the fracking boom could be the turning point which will help return in manufacturing jobs to the US. So far the increase in energy competitiveness in the US has increased investment, but those investment are geared towards capital heavy sectors such as chemical, drilling and industries with energy dependent feedstock. This has not flowed through into the broader job creation.

2. Flattening of the US workforce participation rate 

 US Workforce Participation Rate 

Above chart shows the decline of the US labor force participation rate since 1989. The decline since the financial crises is clear and straight. Many argues the decline is structural due to technology and trade. Howver the chart below shows at almost 5 years after the economy, it has still not recovered all the jobs lost. The growth in employement however excluding government jobs would show the opposite. This shows the fiscal drag as one of the primary factor is slow recovery (albeit not as horrendous as the EU austerity campaigns).


US Jobs recovery










Market is still optimistic that the above growth in NFP will continue as the fed taper continues. However the sell off after market opening shows some think that the high expectations instilled in the markets mind prior to this month release should be pared back. The weakness in mo-mo stocks and tech in general could be a harbinger of risk off in the near term.