The Bureau of Labor Statistics’ April jobs report contained modestly encouraging economic news.
The payroll survey showed employers added just under a quarter million net new jobs in the month while the household survey reported unemployment falling to 5.4 percent—its lowest level since mid-2008. On the whole, the report provided a positive counterpoint to recent negative economic news.
The payroll survey reported employers creating 233,000 net jobs in April with gains in many sectors. The largest increases came in construction (+45,000), health care (+45,000), administrative and support services (+39,000) and food services and drinking places (+26,000). Government payrolls expanded as well (+10,000).
The drop in oil prices caused the mining sector to shed more jobs (-15,000). Since Jan. 1 mining employment has shrunk by almost 50,000 employees. These figures probably understate job losses in the sector because the industry employs a large number of independent contractors who do not get counted by the payroll survey.
These job gains represent a welcome change from March’s sluggish growth. That month employers added only 85,000 net new jobs—well below the number needed to keep pace with population growth.
Other figures in the payroll survey contained less good news. Average weekly hours remained flat over the month (34.5). Average hourly earnings increased by just 3 cents. Over the past year average hourly earnings have risen by 2.2 percent, only slightly above the rate of inflation.
The household survey reported the unemployment rate dropping by (a statistically insignificantly) 0.1 percentage points to 5.4 percent. While this is good news, there are few signs that Americans who left the labor force during the recession are re-entering it in large numbers.
The labor force participation rate increased slightly and returned to its February level, rising from 62.7 to 62.8 percent. At the same time the employment-to-population ratio for both all adults (59.3 percent) and 25- to 54-year-olds (77.2 percent) remained unchanged.
The drop in oil prices caused the mining sector to shed 15,000 jobs. Since Jan. 1 mining employment has shrunk by almost 50,000 employees.
Further, the length of time Americans remain unemployed remains stubbornly high. In April the average unemployed worker had gone without work for 30.8 weeks (7 months), while the median unemployed worker had been jobless for 11.7 weeks (3 months).
Many Americans who lose their jobs find new ones relatively quickly, but a significant minority still experience far greater difficulty finding work now than before the recession hit.
The good news in the April jobs report contrasts with other recent weak economic indicators. The Bureau of Economic Analysis reports economic growth slowed to a crawl in the first quarter of the year—the economy grew at only a 0.2 percent annual rate.
Another payroll survey—the ADP employment report—showed more modest growth (+169,000). Worse the ADP survey has showed job growth slowing for five straight months. The March employment report also found a slowing labor market.
The good news in the April employment report makes it more likely these are anomalous trends rather than indicators of an impending economic slowdown.
However, labor market data tends to lag broader economic trends. Furthermore, these figures represent preliminary estimates subject to revision as more data comes in. The initial March payroll survey suggested employers created 126,000 jobs in the month. This month’s released revised that figure down by 41,000 jobs.
It is possible the Bureau of Labor Statistics will also revise down this month’s encouraging figures. The jobs report contains good news, but the economy has not exited the woods yet.
