BLS April Unemployment Report Review
The BLS announced the US economy created only 115,000 new jobs in April. Economists had expected at least 150,000 new jobs, however the number can vary by plus or minus 100,000 jobs. The amount of new jobs was below what was expected but in line with US GDP growth rate of 2.2%. The US national rate was reported at 8.1%.
The US national rate continues to slowly drop which is good news for President Obama's election campaign.
The Dow Jones equity index lost about 100 points on the announcement (and 400 index points for the week) based on the poor job creation news. Almost every other employment indicator was the same as the previous month.
The biggest news was a large increase in people who were not in the labor force. An additional 522,000 people dropped out of the labor force. The national labor force participation rate decreased 0.2% to 63.6% which is the lowest since December 1981. Black labor force participation was 61.3 (63.2% for Black men and 59.7% for Black women) which is also similar to the rate during the early 1980s. The black rate peaked at over 66% during the late 1990s. Both the participation rate and the “not in the labor force” rate affect the unemployment rate which dropped by 0.1%. Rate is dropping for the wrong reason: people leaving the labor force not growth in the jobs market.
The black unemployment rates is displayed below.
The black rate bounced down to 13.0% because of a drop in the size of the labor force and an increase in the number of people working. The white unemployment rate increased ten basis points to 7.4% and the Hispanic rate stayed at 10.3%. The black teenage unemployment was reported at 38%.
The "real" black underemployment rate was above 20% but declining. It has dropped by 15% in the last year.
There was no major news from the Obama or Romney campaigns on jobs or economics.
The long-term unemployed (27 weeks or more) dropped slightly to 5.1 million people which represents 41% of the unemployed. The “work part-time wants full-time” number was 7.9 million. These people are considered under employed. Two million, four hundred thousand people were marginally attached to the labor pool. They want work but have not looked in over four weeks. And there were 968K discouraged workers(part of marginally attached) who are not looking because they believe there is no job for them.
Private sector hiring added 130,000 jobs (vs. 166,000 last month) and government employment dropped again by -15K (local government -12,000). Job growth was concentrated in durable goods manufacturing, business services and healthcare. The losers were construction (-2K) and transportation and warehousing(-16,600 jobs). Government employment was down by -15,000.
Let’s review some of the key areas of the economy. Durable goods manufacturing added 16,000 spots; Construction lost -2000 jobs; Business services added 62K(21K temp help) and healthcare added 18,000 new positions.
The chart below shows the breakdown by minor category. You can see that the biggest jump was in business services. Growth was broad based coming from several technical areas. Construction is still hurting. Construction is about 5% of GDP. Manufacturing continue grow.
You can see from the chart below that job growth slowed this month compared to the recent winter months where more than 200,000 jobs were created.
The US is making progress in recovering from the recession. We are still down about 5 million jobs since the start of the recession. Approximately 2.5 million jobs have been created since the end of the recession.
At the current rate of growth, we will regain the lost jobs some time in the year 2016 based on a linear forecast. However, are more realistic recovery curve would flatten as the recovery continues, so we expect the real date to be around 2018.
Non-farm payrolls were revised in February upward by +19K (from 240,000 to 259,000) and in March by +34,000(from 120K to 154K).
Average work week was unchanged at 34.5 hours and wages added 1 cent in March.
ADP reported an increase in private payrolls of 119,000 positions.
Monster Employment Index moved up to 146 in April from 143 in March. Hiring was up 1% compared to same month last year.
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