April BLS Unemployment Review: Solid Report with great revisions

165,000 new jobs added in April

The April unemployment report was another average growth report recording a net 165,000 new jobs (176,000 private job gains and a loss of -11,000 government job) added to the economy. The report, which was released on  May 3rd, 2013, recorded a 0.1% drop in the national unemployment rate from 7.6% to 7.5%.  The number of total unemployed persons was around 11.7 million of which 4.4 million were long-term unemployed.  An additional 7.9 million people were underemployed (working part time but wanted full time work) so a total of 19.5 million are unemployed or underemployed. That is about 13% of the workforce.

The unemployment rate for women declined to 6.7% while the rates for other groups remained unchanged: men (7.1%), teenagers (24%), whites (6.7%), blacks (13.2%) and Hispanics (9.0%) were unchanged.

The labor force participation rate was 63.6% which is low by historical standards.  The employment to population ration stayed at 58.6%.  The rate reached a peak in 2000 at nearly 65% and as late as 2007 the rate stood at 63%.  If the rate were 63% right now, approximately 10 million more people would be employed !!!  The economy is short 10 million jobs !!!

The Big Story

On the day the report was released, the Dow Jones Industrial Average broke 15,000 for the first time. It later retreated, but based on the employment report, the index made a strong move over 15,000 later in the week. In political news, Alan Kruger, Chairman of the Presidents Council of Economic Advisers issued a standard statement welcoming the news while criticizing the government cuts led by Congress known as the sequester.

The second big story was the positive revisions of NFP payroll data for February 2013 from 268,000 to 332, 000 which is an increase of +64,000 positions and a positive March revision from 88,000 to 138, 000, an increase of 50,000.  The total revision was +114K for the two months.

Unemployment report summary

Non Farm Payroll increased by 165,000 which is just below the 12 month average of 169K jobs created.   There was strong growth in all employment categories except construction, information and federal government. The unemployment rate dropped 0.1% to a calculated 7.5%.

The black unemployment rate was set at 13.2%. The number of black people who held jobs grew by 99,000 while the labor force grew by 93,000 causing a 0.1% drop in the unemployment rate. The 12 month average has be 13.75%

The chart below shows the slow decline in the national unemployment rate and the recent plateau of the black unemployment rate.

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Household Survey Results for February

The household data survey reported that the total labor force expanded by 210,000 while the number of people working expanded by 293,000. When the change in workers is greater than the change in the labor force (293K / 210K > 1) the unemployment rate goes down. The household survey is a sample of individual workers and considered less accurate than the establishment survey(business). 

The chart below shows the real black unemployment rate (Black U-6) is stuck around 20% even as US national rate slowly declines.

The long-term unemployed (27 weeks or more) was 4.4 million people which represents 37% of the unemployed.  The median duration of unemployment was 17.8  weeks  while the average duration was 36.9 weeks.  People are finding jobs slightly faster.

The “work part-time, wants full-time,” number was 7.9 million.  These people are considered under employed and would like additional work.  About 2.3 million workers were marginally attached to the labor pool.  They have looked for work in the last 12 months but not in the last four weeks.   And there were 835K discouraged workers (part of marginally attached) who are not looking because they believe there are no jobs for them.

There are some small but good signs in the report: the numbers of both marginally attached and discouraged workers have been dropping for several months.

Establishment Survey Results for February

Non-Farm Payrolls rose by 165,000 positions in April with growth coming in business services, education, health care and leisure. Construction was a very strong area of the job growth.  Construction added 48,000 jobs while retail trade added +24,000. Government lost -10,000 jobs. 

The following chart show the huge jump in private jobs which added 165,000 jobs in April. You can see the wide spread growth across all job categories except for construction, information and the federal government.

Non-Farm Payroll Revision

As stated earlier February and March NFP figures were revised upward by +114,000 jobs.

The average work week decreased to 34.4 hours and wages added 4 cent in April 2013.

ADP

ADP reported an increase in private payrolls of 119,000 positions for February.  Small business (1-49 headcount) added 50,000 jobs; medium size (50-499) added 26,000 and large companies (500+) increased workers by 43,000. The breakdown is important because large businesses tend to pay employee more and offer better benefits.