Conflicting Employment Numbers in March: What the Heck Does That Mean?

There are conflicting numbers on unemployment coming out. The number of people applying for unemployment benefits fell 6,000 in the week ended March 27, 2010 to a seasonally adjusted 439,000, the Labor Department reports.

On the other hand, A day after the monthly ADP survey showed a private sector job loss of 23,000 compared to a predicted 40,000 gain, employment consulting firm, Challenger Gray, said employers cut 67,611 jobs last month.

The ADP and Challenger numbers indicate that after an improvement in the unemployment picture in January and February, March employment numbers began to decline again, though the Labor Department figures suggest a continued recovery.

So far, the recession has caused the loss of 7.2 million jobs, and the Administration $787 billion stimulus package may have slowed the rate of attrition, but it has not begun to reverse it.

The importance of the unemployment numbers is obvious enough. Consumer spending drives at least 66 percent to 70 percent of all gross domestic product. Until consumer spending recovers, the economy cannot recover.

If the jobless numbers begin to deteriorate again, there will be serious concern about the viability of the recovery.

"The March jobs picture may be the beginning of a trend that America cannot afford to live through for a second time, if there is any hope of a recovery this year," says financial analyst Douglas McIntyre of 247wallst.com.

There is some possibility that the difference between the Labor Department figures and the ADP and Challenger Gray numbers is that the latter are biased to private sector employment, and there obviously has been an increase in temporary jobs caused by the hiring of workers taking the U.S. Census.

The worrisome implication is that private sector employment continues to struggle, and might even have worsened in March 2010, if that is possible.

All of this matters to every citizen, and obviously to any business that sells products to consumers, including communication and video service providers. Historically, voice, broadband, mobile and video services have held up quite well in recessions, and that seems to be the case for the most-recent recession as well.

That is not to say market share shifts halted, or that some legacy products struggled while rising new products gained. Voice market share continued to shift away from telcos and to cable operators and wireless; mobility overall did well while use of smartphones and mobile broadband grew as if there was no recession. Cable operators generally continued to lose video market share to telcos and satellite providers. But all those trends were in place before the recession, and are not caused by it.

If the housing market remains stalled, and unemployment remains high, it seems unlikely there will be too much change in consumer markets. Business markets could be another matter. Most businesses can put off making needed investments for a year or two. But no business can afford to postpone required investments indefinitely.

That suggests business investments could be a brighter spot for service providers in the business segments.

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