April Jobs Report Disappoints After Three Months Of Positive News
After starting off the year strong, the jobs market seems to have taken a rest in April.
After several months of good news in the form of reports of strong jobs gains accompanied by at least semi-decent wage growth, the jobs market seemed to take a break in April, but it’s unclear if this is a temporary respite or a sign of trouble ahead:
Total nonfarm payroll employment increased by 160,000 in April, and the unemployment rate was unchanged at 5.0 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, and financial activities. Job losses continued in mining.
In April, the unemployment rate held at 5.0 percent, and the number of unemployed persons was little changed at 7.9 million. Both measures have shown little movement since August. (See table A-1.)
Among the major worker groups, the unemployment rate for Hispanics increased to 6.1 percent in April, while the rates for adult men (4.6 percent), adult women (4.5 percent), teenagers (16.0 percent), Whites (4.3 percent), Blacks (8.8 percent), and Asians (3.8 percent) showed little or no change. (See tables A-1, A-2, and A-3.)
The number of long-term unemployed (those jobless for 27 weeks or more) declined by 150,000 to 2.1 million in April. These individuals accounted for 25.7 percent of the unemployed. (See table A-12.)
In April, the labor force participation rate decreased to 62.8 percent, and the employment-population ratio edged down to 59.7 percent. (See table A-1.)
(…)
Total nonfarm payroll employment increased by 160,000 in April. Over the prior 12 months, employment growth had averaged 232,000 per month. In April, employment gains occurred in professional and business services, health care, and financial activities, while mining continued to lose jobs. (See table B-1.)
Professional and business services added 65,000 jobs in April. The industry added an average of 51,000 jobs per month over the prior 12 months. In April, job gains occurred in management and technical consulting services (+21,000) and in computer systems design and related services (+7,000).
In April, health care employment rose by 44,000, with most of the increase occurring in hospitals (+23,000) and ambulatory health care services (+19,000). Over the year, health care employment has increased by 502,000.
Employment in financial activities rose by 20,000 in April, with credit intermediation and related activities (+8,000) contributing to the gain. Financial activities has added 160,000 jobs over the past 12 months.
Mining employment continued to decline in April (-7,000). Since reaching a peak in September 2014, employment in mining has decreased by 191,000, with more than three-quarters of the loss in support activities for mining.
Employment in other major industries, including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, leisure and hospitality, and government, showed little or no change over
the month.
Adding to the relatively somber tone of the April report, the Bureau of Labor Statistics reported that the net jobs figure for February had been revised downward from +245,000 to +233,000 while the change for March was revised downward from +215,000 to +208,000, a combined decline of 19,000 which puts the average job creation figure for the past three months at +200,000. On the positive side of the ledger, the average workweek increased slightly for the month as did average hourly wages, a trend that has been ongoing since the start of the year after a long period of stagnation for both numbers. Additionally, long term unemployment declined slightly yet again while the labor force participation rate decreased slightly, two seemingly contradictory signals about what might be happening with those people who have been out of work for a long period of time.
The New York Times characterizes the report as signs of an at least temporary slowdown:
After months of gravity-defying gains, the American jobs machine cooled in April, as employers took their cue from other signs that economic growth was slowing by easing up on new hiring.
The 160,000 increase in payrolls in April reported by the Labor Department on Friday came after the best two-year stretch for the job market since the tech-fueled boom of the late 1990s.
The unemployment rate, which is tied to a separate survey of households, stayed at 5 percent.
While a downshift, the still-healthy pace of hiring contrasts with other economic signals that have been decidedly mixed recently. Late last month, for example, the government reported that the economy barely expanded in the first quarter.
But most experts say the steady gains in the labor market in recent months are a more reliable sign, suggesting that the economy should continue to expand for the rest of 2016, with the pace picking up modestly from the stagnant opening period.
“This isn’t a sign of real weakness,” Diane Swonk, an independent economist in Chicago, said of Friday’s report. “The quality of the jobs improved but the quantity did not,” she added, pointing to a strong gain of 67,000 jobs in the business and professional services category.
Mostly white-collar, the health of this sector explains why wage growth was also robust.
The 0.3 percentage point rise in average hourly earnings was the most positive sign of the economy’s trajectory in Friday’s report.
Until a nascent pickup recently, wages had been a sore point throughout the nearly seven-year-old recovery, barely rising in real terms despite the big drop in the unemployment rate.
The change in earnings in April, which was in line with Wall Street’s expectations, suggested that the upward tick in wages wasn’t a fluke. Over the last 12 months, wages are up 2.5 percent, well ahead of the pace of inflation.
When roughly 40,000 Verizon workers went on strike last month, it was right in the middle of the week that government number crunchers analyze to gauge the strength of the job market. That may have had a modest impact on the numbers reported by the Labor Department.
“The good news is that we are re-engaging people who’ve been on the sidelines,” Ms. Swonk said. “The question is how far we can go.”
That question is also being pondered by Janet L. Yellen, the chairwoman of the Federal Reserve. Though the central bank kept rates steady when policy makers met last month, some economists argue they could move at their June meeting.
But with inflation still very subdued and more dovish officials worried that another rate increase could choke off growth, other experts argue that any tightening in monetary policy will not happen until later in the year.
In addition to what it might mean for future Federal Reserve policy, of course, economic statistics such as these are likely to have a significant impact on the election season going forward, especially now that we are more or less officially heading into what promises to be one of the most intense General Election campaigns in quite some time. Democrats will seek to emphasize the good news of a record of continued job gains, while Republicans will cite the the fact that we are hardly at a rate of job growth that indicates a healthy economy. Which side ends up benefiting the most from economic news such as this will depend in the end both on where the economy heads between now and November and how the voting public feels about their own personal economic security. To a large degree, for example, Donald Trump’s campaign has been built on speaking to a sense of economic insecurity among middle class Americans that has been around since long before the Great Recession, and news such as this tends to play into that narrative quite well. Democrats, on the other hand, have built their 2016 campaign largely around the message of continuing the successes of the Obama Administration, meaning that any perception that the economy may be turning sour could work against them. In the end, I tend to doubt that even a recession, which is unlikely, would be enough to lead to a Trump victory over Clinton in November, but the state of the economy could have a real impact on down ballot races where the GOP will be fighting to preserve its Senate majority. As is the case every four years, these numbers will be worth paying attention to over the next six months.
This is likely to be an anomaly. Government spending is surging over the last couple of weeks and accelerating. We’re already up $78 billion over last April, deficit also expanding so I wouldn’t read too much into this. Dollar bearish/ commodities bullish.
Dear Doug: You left out the word “unexpectedly”. That word must always be used when Democrats report bad economic news.
Only 2 out of the last 28 months have reported under 150K jobs. When it starts to trend more south of that number it might raise an eyebrow, but if May misses estimates expect everyone to start saying the sky is falling…again…just google “2012 heading to a recession” back in 2012 where job growth was not meeting expectations.
It (the 6 years of negative Republican narrative) works quite well with middle class voters who are Republican because those people tend to reject actual numbers that reflect the ongoing recovery from the 2008-2009 Great Recession –
(1) steady economic growth since 2009? *No, numbers are cooked
(2) steady reduction in unemployment from 10% to 5% since 2009? *No, numbers are cooked
(3) increase in DJIA from under 8,000 to nearly 18,000? *Yes, but, doesn’t effect me
(4) Inflation rate below 3%? *No, numbers cooked
(5) worst economic collapse since Great Depression *stop blaming reality
@john430:
Well except the fact is that the economy fares far better under Democrats than Republicans.
But your comments have never been very concerned with facts.
I wonder if Trump’s recklessness as the GOP nominee could have any impact on the economy, particularly as polls inevitably tighten in the General Election and investors start to worry he may actually have a chance:
http://www.nytimes.com/2016/05/07/us/politics/donald-trumps-idea-to-cut-national-debt-get-creditors-to-accept-less.html
April Jobs Report Disappoints After Three Months Of Positive News (may 6)
Modestly Good News From The March Jobs Report
March’s Jobs Report was good, but could be better. (april 1)
Solid Jobs Growth For February, But Shadows Remain Hovering Over The Economy
February’s Jobs Report was relatively positive, but there are still shadows hovering over the economy as we head further into the year. (march 4)
After Two Solid Months, January Brings A Decidedly Mediocre Jobs Report
January’s Jobs Report was nothing to write home about. (feb 5)
@Jeremy R:
Yeah…this is amazing to me.
Let’s be clear what this is about…a candidate for President is openly planning to default on our debt.
Forget about it being un-constitutional. It would plunge the world economy into turmoil.
And this is the second time this week that he has shown his ignorance regrading economic matters…the first was when he said PR should declare bankruptcy.
Any Republican that supports Trump is more concerned with party than country.
@Jeremy R: Trump’s suggestion is quite doable without default.
@Ben Wolf: Um, one of the reasons the rates are so low are because of the low risk in paying back on U.S. treasuries.
You start messing with that equation–> risk goes up –> rates need to go up as well.
At the moment the US has immense power in the financial sphere because we produce the default currency.
We decide to ruin our reputation and for what?
The jobs situation in many areas remains mediocre to bleak. When people are lining up for openings at fast food restaurants, there is a problem.
Around here large factory buildings that once housed textiles and furniture factories now stand vacant: those that have not been torn down. At one time they were running 24/7. The jobs, while not high paying, did earn good wages when overtime was thrown in. Also, the culture of the mill village is gone: sad. This is the result of this country’s big industries being shipped out over seas in unfair trade deals that started decades ago. Our town leaders keep hoping and waiting for the day when the textiles and furniture industries return. High tech has not found its way here to replace them. A sweatshirt made overseas can sell for $50.*
The job openings around here consist of such lucrative careers as pet grooming assistant, school crossing guards, bed sales persons, and church pianist (it seems there is a big market for these church pianists. If you know how to play a piano, you are in luck).
*Certainly it could be made and sold in this country for much less than $50.
The president and his economic advisors need to get major industries back to this country.
http://www.cotton.org/econ/textile-crisis.cfm
http://yesweekly.com/article-13053-the-decline-of-the-textile-industry.html
http://kingworldnews.com/
http://www.cnbc.com/2016/05/02/jim-rickards-says-for-gold-prices-will-go-higher-as-dollar-weaken.html
@Tyrell:
Yes, there is regional differentiation.
@grumpy realist: Rates are low because the yield curve follows the Federal funds rate. The bond market doesn’t lead it does what it’s told so A) Fed buys older securities and Treasury re-issues at lower rate or B) set the rate permanently to zero and grandfather older securities out.
Yeah, let’s see how bond markets react. Trump thinks running gov is like running one of his businesses. He is nutty
This is disappointing? Doug, maybe it’s time for you to upgrade your template. How about this? “Obama’s economic recovery continues, but at a slower pace”. You can do it…
The birth/death ratio, a fudge fact, uh, er, adjustment was 230,000. It dwarfs the jobs number.
Jobs are still being dominated by the proverbial “retail and hospitality” read: bartenders and waiters.
Consumers are buying inordinately on credit. Aka borrowed time.
Another huge number of people dropped out of the workforce, and it wasn’t the over 55 demo.
The only one peddling fiction is Obama and his slobbering followers here.
There’s a reason people are pissed off out there, and why the Fed isn’t raising rates.
@Guarneri: In addition, many of the “new” jobs are short hours with little or no benefits: we used to call those “summer” jobs.
Next year many people will see double digit health insurance increases as the federal government lets the health insurance companies pass their losses onto the insured people. These losses are the results of fewer than expected young, healthy people signing up for the government health care plan.