There was a lot of important information on the U.S. economy released this week but the biggest data point is without a doubt the latest monthly job report from the Bureau of Labor Statistics (BLS) out this morning. Indeed, total nonfarm employment in America rose by 160K payrolls in April, significantly worse than the +200K consensus estimate and the smallest month-over-month increase since last September. There were also downward revisions (-19K in total) to the February and March figures but the less-volatile 3-month average payrolls gain still sits at a healthy +200K, more than enough to exceed population growth and continue to slowly chip away at the jobless rate. Further, this is the 67th consecutive month of net job creation, the longest such streak in U.S. history, and the official unemployment rate (U-3) held steady at 5.0 percent. The underemployment rate (U-6) fell to 9.7 percent in April, and the civilian labor force participation rate slid to 62.8 percent, the first sequential decrease in more than half a year. The employment rate for “prime-age” Americans declined in April but is still not too far off of the highs for the current economic cycle.
The hiring gains were largely concentrated in the private services sector last month but aggregate weekly payrolls for mining and logging workers rose for the first time since last July, and there was a solid bounce in average weekly overtime hours for manufacturing workers. Further, construction employment remained strong in April, with the unemployment rate for workers in this sector falling to the lowest level (NSA) since 2000 (6.0 percent now vs. 5.8 percent then). The apparent rising demand for construction workers could actually wind up cannibalizing manufacturing employment, and therefore result in a manufacturing labor shortage down the road. Other slack-related highlights from the report include that the jobless rate for college graduates fell to a new recovery low of 2.4 percent, and 25.7 percent of unemployed Americans have been out of work for 27 weeks or longer, down from 28.7 percent a year ago. As for wage growth, average hourly earnings rose by 0.3 percent in April, and the average employee workweek lifted to 34.5 hours. Americans' paychecks have been hovering just above an average annual gain of 2 percent since the current economic expansion began in 2009 but continued employment growth in the prime-age group of workers should be supportive of accelerating wage growth going forward.
Sources: Econoday, Twitter, Bloomberg, WSJ, ZH, U.S. DoL, FRBSLPost author: Charles Couch