Capture

  • The headline figure from today’s employment report was strong, but the underlying numbers still point to weakness. 288,000 payroll jobs were created in April according to the Bureau of Labor Statistics, while the March numbers were revised upward by 11,000 to 203,000. The 85,000 jump from March is significant but likely reflects some catch-up following several months of adverse weather. The improvement was broad-based across industries and the government.
  • The unemployment rate slipped from 6.7% to 6.3% over this same period. This figure is derived from a different survey which queries households about their employment position. Consequently, non-payroll jobs are counted. While the figure is strong at face value, the decline was in part due to the departure of 806,000 workers from the labor force. Fewer workers mean fewer people earning incomes and spending, so while the jobs increase is positive, the decline in people searching for work is troubling. This portion of the report is volatile, though, so next month’s figures and revisions will be important. Because of the drop in the labor force, the labor participation rate fell from 63.2% to 62.8%.
  • This month’s reading of the labor market was a mixed bag. The job gains, decline in unemployment rate, and revision point to improvement and will help consumer confidence, but the loss of 806,000 workers and drop in labor utilization suggest a schism in the labor force driven by a skills miss-match where workers with skills in demand are being hired, while others languish. The economy depends on consumer spending and if the number of persons spending declines, those with jobs must spend more, which is difficult to sustain. Better weather in May will help construction and construction employment, and the April pop will likely ease to a higher-than-recent plateau, but still far more jobs are needed to affect the large reserve of unemployed and underemployed.