April 2017 Employment Situation Summary (050517): 211K Payroll Jobs Added, Unemployment Rate Drops to 4.4 Pct.; Seasonal Adjustments Overstate Underlying Strength by ~60K; Full-Time Employment Up 480K (Over 1.7 mil in Past 4 Months)
Predictions at Yahoo’s Economic Calendar: 175,000 to 180,000 Establishment Survey jobs added; unemployment rates rises to 4.6 percent from last month’s 4.5 percent.
The report will be here at 8:30.
HERE IT IS (full release with all tables here): First blush looks better than expected, but the devil is in the details —
Total nonfarm payroll employment increased by 211,000 in April, and the unemployment rate was little changed at 4.4 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in leisure and hospitality, health care and social assistance, financial activities, and mining.
Household Survey Data
Both the unemployment rate, at 4.4 percent, and the number of unemployed persons,
at 7.1 million, changed little in April. Over the year, the unemployment rate has
declined by 0.6 percentage point, and the number of unemployed has fallen by 854,000.
Among the major worker groups, the unemployment rate for adult men declined to 4.0 percent in April. The jobless rates for adult women (4.1 percent), teenagers (14.7 percent), Whites (3.8 percent), Blacks (7.9 percent), Asians (3.2 percent), and Hispanics (5.2 percent) showed little change.
The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.6 million in April and accounted for 22.6 percent of the unemployed. Over the year, the number of long-term unemployed was down by 433,000.
The labor force participation rate, at 62.9 percent, changed little in April and has
shown little movement over the past year. The employment-population ratio, at 60.2
percent, was also little changed over the month but was up by 0.5 percentage point since December.
… Establishment Survey Data
Total nonfarm payroll employment increased by 211,000 in April. Employment rose in leisure and hospitality, health care and social assistance, financial activities, and mining.
In April, leisure and hospitality added 55,000 jobs. Employment in food services and drinking places continued to trend up over the month (+26,000) and has increased by 260,000 over the year.
Employment in health care and social assistance increased by 37,000 in April. Health care employment continued to trend up over the month (+20,000). This is in line with the industry’s average monthly job growth during the first quarter of this year but below the average gain of 32,000 per month in 2016. Social assistance added 17,000 jobs in April, with all of the gain in individual and family services.
In April, financial activities added 19,000 jobs, with insurance carriers and related activities accounting for most of the gain (+14,000). Over the year, financial activities has added 173,000 jobs.
Employment in mining rose by 9,000 in April, with most of the increase in support
activities for mining (+7,000). Since a recent low in October 2016, mining has added
44,000 jobs, with three-fourths of the gain in support activities for mining.
Employment in professional and business services continued to trend up in April (+39,000). The industry has added 612,000 jobs over the past 12 months.
Employment in other major industries, including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, and government, showed little change over the month.
The average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.4 hours in April. In manufacturing, the workweek edged up by 0.1 hour to 40.7 hours, and overtime edged down by 0.1 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.7 hours.
In April, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $26.19. Over the year, average hourly earnings have risen by 65 cents, or 2.5 percent. In April, average hourly earnings of private-sector production and nonsupervisory employees increased by 6 cents to $21.96. (See tables B-3 and B-8.)
The change in total nonfarm payroll employment for February was revised up from +219,000 to +232,000, and the change for March was revised down from +98,000 to +79,000. With these revisions, employment gains in February and March combined were 6,000 lower than previously reported. Monthly revisions result from additional reports received from businesses since the last published estimates and from the recalculation of seasonal factors. Over the past 3 months, job gains have averaged 174,000.
UPDATE 1: The not seasonally adjusted results in payroll jobs were less than what one would have hoped for, and BLS’s reported seasonally adjusted results overstated April’s underlying performance.
Overall, 1.026 million more people had payroll jobs in April than in March:
Compared to previous, that’s an underachievement; I would have been benchmarking a 1.2 million jobs-added result as acceptable if I had done so ahead of the release. Looking at the seasonal conversion, it was extremely generous in the compared to the conversions done in the past two Aprils (by about 100K), but in line with what was seen in 2014 and 2013. With that, I’d have to say that in the context of previous years, a figure of 150,000 seasonally adjusted jobs added would have better reflected underlying reality.
Looking at the table above, one can see that May 2016 was quite weak. The economy needs to do a lot better this year than last year in adding jobs next month, or there will be reason to question whether the momentum everyone has been hoping for is really there.
The private sector seasonal conversion was similarly overstated, supporting an underlying reality of maybe 130,000 jobs added after seasonal adjustments vs. the 194,000 reported.
UPDATE 2 (reference is to seasonally adjusted results unless otherwise indicated):
- Labor force growth, at only 12K, screeched to a virtual halt. Houshold Survey employment increased by 156K, but the not in labor force number crept up by 162K to 94.375 million.
- The unemployment rate for 20-and-over black men dropped by almost a point from 8.2 percent to 7.3 percent (6.9 percent before seasonal adjustment). The unadjusted result is the best April since the turn of the century. The seasonally adjusted result ties January for the best result in any month since February 2001. Unfortunately, though, workforce participation rates now are 4-5 percentage points lower now than they were in 2000 and 2001.
- The increase in full-time jobs can’t be seen as a fluke any more. In April, FT employment increased by 480K, and part-time employment dropped by 370K. Seasonally adjusted FT employment has increased by 1.739 million since December, and is significantly greater than the 1.548 FT jobs added in all of 2016. The move to more full-time employment is a large offset to the otherwise less-than-acceptable payroll jobs added result (after the considering underlying numbers).
- The fully-loaded “U-6″ unemployment rate is down to 8.6 percent (8.1 percent unadjusted), the lowest since December 2007. That’s nice, but it doesn’t address the large numbers of working-age people still not in the labor force whom the government says isn’t looking hard enough for work.
- On the payrolls side, job gains were widely distributed, but there seems to be a slowdown in the growth of professional services jobs that bears watching.
- The 7 cents per hour increase in the average hourly rate is welcome, and needs to be repeated for quite a few more months. Thanks to the increase in the average work week, average weekly earnings rose by $5.02, which also needs to be repeated to be evidence of a convincing trend.
OVERALL: The unemployment rate drop is mostly for the wrong reasons, as workforce growth stalled. Payroll jobs added weren’t as strong as the government’s seasonally adjusted numbers indicate. However, the spurt in full-time employment largely offsets the mediocrity seen elsewhere. If it continues at the current 5 million-plus per year rate, it will be a huge cause for celebration, and a major indication that the eight years of malaise which preceded this year may finally be lifting.