April Employment…Not Bad

by Zach Bethune, Tom Cooley and Peter Rupert

Today’s employment report for April from the BLS showed a solid gain in employment +223,000. However, a downward revision of -41,000 leaves March at a disappointing 85,000 with one more revision to go. Probably the best thing about the report is that it was not bad. The numbers roughly hit the consensus forecast of 230,000. But the recent performance underscore how noisy this estimate is.  Nevertheless, the numbers signal an economy that is growing slowly, but definitely growing in spite of many challenges in the global environment.

The gains, however, were pretty much across the board, although, mining and logging saw a third straight month of decline as the oil industry continues to struggle with the low oil prices. There has been a slight uptick in those prices of late.

Average hours of work have remained pretty flat over the last few months, around 34.5.

Nominal earnings growth remains flat, but in real terms, labor income is up.

On the household side of the ledger, there was a fairly restrained increase in employment, 166,000. The unemployment rate declined slightly to 5.4%…that is from 0.05465056 to 0.05442727.

And the long term unemployed (27 weeks and over) fell slightly but remains elevated, obviously a concern as these workers may lose skills and become even more difficult to hire.

The employment to population ratio is also quite sluggish…stuck at 59.3% since February.

The other slightly negative news is that productivity declined for the second straight month…it is the first time this has happened since 2006!

Putting this together, it appears as if the good news is that it wasn’t bad news…meaning that it does not appear that it will change anyone’s view of when the Fed will begin liftoff. Many commentators have feared that future revisions of Q1 GDP could show that it actually shrank.  These number do not seem consistent with that, although as noted above, they could be revised downward as well.