April jobs report: More mixed signals.

by: Zach Bethune, Thomas Cooley, Peter Rupert

The establishment survey reports total non-farm employment increased 288,000 and the previous two months were also revised up a total of 36,000 over what was previously reported. Job growth over the year has averaged 190,000 per month. Moreover, the job gains were fairly widespread with service producing jobs leading the way with 220,000 jobs added. Goods producing and government employment showed little change.


The unemployment rate fell from 6.7% to 6.3%.


Some cold water on the report

But is the report really as good as it looks at first blush? Maybe not…average weekly hours of work were unchanged at 34.5 and average hourly and weekly earnings remained flat at $24.31 and $838.70, respectively.


According to the household survey the labor force fell by 806,000 and the labor force participation rate declined from 63.2 to 62.8. Is this decline in the labor force participation rate (and the consequent decline in the unemployment rate) due to discouraged searchers leaving the labor market? Or, is it a longer run trend down in participation rates? According to the household survey employment fell by 73,000.

Some of the decline in labor force participation is attributed to the fact that the long duration unemployed have dropped out of the labor force.  The average duration of unemployment is little changed at 35 weeks and more than 35% of the unemployed are unemployed for 27 weeks or more. Many of the long duration unemployed eventually stop looking for work and thus drop out of the labor force.  This has been an important contributor to the declines in labor force participation.



As often happens, it is possible to use this report to signal strong growth in the labor market or to underscore the real weaknesses in the economy. The takeaway is that the labor market still appears fragile.

2 responses

  1. Peter and Tom,

    Good report. Sometime you should educate people as to what a job is. Jobs and employment are different things. A job is a contract between an employer and employee (one with job). If you are an unincorporated businesses you do not have a job. If you incorporate, you have a job. The employer is the corporation. This is the case even if you are a single person corporation. There are about 10 million sole and partnership proprietors. Given these businesses are not incorporated, these proprietors do not have a job in that business. All the Fed Ex drivers are sole proprietors and therefore do not have a job. The CPS employment is people at work and this includes proprietors. It handles the multiple employment people like myself, I think. Incidentally, there are big seasonal biases associated with sampling with the jobs numbers.

    Ed ________________________________________

    • Ed,
      Thanks, you are right, there is often confusion about what these numbers actually measure. The Bureau of Labor Statistics Handbook of Methods describes this accurately…and we will work on a post clarifying differences, but for now, here is what the Handbook says:
      “The Bureau of Labor Statistics (BLS) conducts the Current Employment Statistics (CES) survey, collecting data each month on employment, hours, and earnings from a sample of nonagricultural establishments. The sample includes about 140,000 businesses and government agencies, which cover approximately 440,000 individual worksites drawn from a sampling frame of roughly 9.0 million Unemployment Insurance tax accounts. The active CES sample includes approximately one-third of all nonfarm payroll employees.”

      However, as Ed correctly points out, the payroll employment numbers published by the BLS do not include sole-proprietorships even though they are, evidently, working. Again, from the BLS Handbook Ch. 2:
      An establishment is an economic unit, such as a factory, mine, store, or office that produces goods or services. It generally is at a single location and is engaged predominantly in one type of economic activity. Where a single location encompasses two or more distinct activities, these are treated as separate establishments, if separate payroll records are available, and the various activities are classified under different industry codes.

      Employment data refer to persons on establishment payrolls who received pay for any part of the pay period that includes the 12th day of the month.

      Data exclude proprietors, the unincorporated self-employed, unpaid volunteer or family workers, farm workers, and domestic workers. Salaried officers of corporations are included. Government employment covers only civilian employees; military personnel are excluded. Employees of the Central Intelligence Agency, the National Security Agency, the National Imagery and Mapping Agency, and the Defense Intelligence Agency also are excluded.”

      Differences between jobs and employment…and between the Establishment Survey and the Household Survey should be taken into account…we will work on this in the coming weeks.

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