May 4, 2018

April 2018 Employment Situation Summary (050418): 164K Payroll Jobs Added, Unemployment Rate Falls to 3.9 Percent; Black Unemployment Rate Hits All-Time Low; Goods-Producing Sectors Continue to Outperform

Filed under: Economy,Taxes & Government — Tom @ 7:13 am

Predictions:

  • Yahoo Economic Calendar — 192,000 payroll jobs added
  • Reuters — 192,000 payroll jobs added, 4.0 percent unemployment rate.
  • Bloomberg — 193,000 payroll jobs added, 4.0 percent unemployment rate.
  • Zero Hedge reported consensus — 198,000 jobs added, unemployment rate stays at 4.1 percent.

Not Seasonally Adjusted Benchmarks:

I’ve retrieved the data, haven’t had time to create a related graphic. My benchmarks are 1.25 million total nonfarm jobs actually added, with 1.2 million of them in the private sector. I’m also hoping that more actual jobs were added in March than the 665K total nonfarm and 603K in the private sector reported last month.

The report will be here (full release with tables will also be here) at 8:30.

HERE IT IS: Topline good news on the unemployment rate, somewhat disappointing news on seasonally adjusted payroll jobs, but a detailed look is coming later —

Total nonfarm payroll employment increased by 164,000 in April, and the unemployment rate edged down to 3.9 percent, the U.S. Bureau of Labor Statistics reported today.

Job gains occurred in professional and business services, manufacturing, health care, and mining.

Household Survey Data

In April, the unemployment rate edged down to 3.9 percent, following 6 months at 4.1 percent. The number of unemployed persons, at 6.3 million, also edged down over the month.

Among the major worker groups, the unemployment rate for adult women decreased to 3.5 percent in April. The jobless rates for adult men (3.7 percent), teenagers (12.9 percent), Whites (3.6 percent), Blacks (6.6 percent), Asians (2.8 percent), and Hispanics (4.8 percent) showed little or no change over the month.

Among the unemployed, the number of job losers and persons who completed temporary jobs declined by 188,000 in April to 3.0 million.

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.3 million in April and accounted for 20.0 percent of the unemployed. Over the year, the number of long-term unemployed was down by 340,000.

Both the labor force participation rate, at 62.8 percent, and the employment- population ratio, at 60.3 percent, changed little in April.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 5.0 million in April. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or because they were unable to find full-time jobs.

… Establishment Survey Data

Total nonfarm payroll employment increased by 164,000 in April, compared with an average monthly gain of 191,000 over the prior 12 months. In April, job gains occurred in professional and business services, manufacturing, health care, and mining.

In April, employment in professional and business services increased by 54,000. Over the past 12 months, the industry has added 518,000 jobs.

Employment in manufacturing increased by 24,000 in April. Most of the gain was in the durable goods component, with machinery adding 8,000 jobs and employment in fabricated metal products continuing to trend up (+4,000). Manufacturing employment has risen by 245,000 over the year, with about three-fourths of the growth in durable goods industries.

Health care added 24,000 jobs in April and 305,000 jobs over the year. In April, employment rose in ambulatory health care services (+17,000) and hospitals (+8,000).

In April, employment in mining increased by 8,000, with most of the gain occurring in support activities for mining (+7,000). Since a recent low in October 2016, employment in mining has risen by 86,000.

Employment changed little over the month in other major industries, including construction, wholesale trade, retail trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in April. In manufacturing, the workweek increased by 0.2 hour to 41.1 hours, while overtime edged up by 0.1 hour to 3.7 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls increased by 0.1 hour to 33.8 hours.

In April, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.84. Over the year, average hourly earnings have increased by 67 cents, or 2.6 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 5 cents to $22.51 in April.

The change in total nonfarm payroll employment for February was revised down from +326,000 to +324,000, and the change for March was revised up from +103,000 to
+135,000.
With these revisions, employment gains in February and March combined were 30,000 more than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 208,000 over the last 3 months.

So seasonally adjusted payroll job adds matched expectations after including the upward prior-month revision to March that I was expecting.

NOT SEASONALLY ADJUSTED RESULTS

Here are the raw and seasonally adjusted figures:

NSAandSApayrollsThru0418

Raw results fell far short of the admittedly aggressive benchmarks I set.

As seen here, the seasonal conversions reasonably reflected reality this time around, showing only a relatively slight 32K-41K overstatement compared to the conversions done in the previous four years. (The first three months of this year showed far higher variances in both directions.)

More shortly.

____________________________

UPDATE (reference are to seasonally adjusted numbers unless otherwise indicated):

  • The workforce and participation numbers are weak. The civilian labor force declined by 236K (nearly 400K in the past two months). Employment per the Household Survey increased by only 3K (down 34K in the past two months). Not in labor force is at 95.745 million. On the positive side, the number of officially unemployed dropped by 239K to 6.346 million.
  • The black unemployment rate of 6.6 percent is the lowest seasonally adjusted figure seen on records going back to 1972. The unemployment rate for 20-and-over black women is 5.1 percent, but for men it’s 6.4 percent. Tempering the enthusiasm is a significant drop in the related workforce participation rates (0.7 points for black women, 0.5 points for black men).
  • The “We’re at full employment” crowd needs to explain why there isn’t a lot more room for improvement, given that the Asian unemployment rate is 2.8 percent. Why shouldn’t the overall unemployment rate be able drop to that level across all ethnic groups?
  • The Hispanic unemployment rate of 4.8 percent matches all-time lows on records kept since 1973 seen three times last year. The rate has been 5.1 percent or lower during the past 11 months.
  • Full-time jobs increased by 319K, while part-timers decreased by 350K. Those numbers are basically the reverse of what was seen in March. In the past 12 months, FT employment has increased by 1.79 million, while part-timers have increased by 304K.
  • The fully-loaded (U-6) unemployment rate fell to 7.8 percent, the lowest level since 2001.
  • The goods-producing sectors had another good month (+49K jobs added). Mining, construction, and manufacturing have added 561K jobs in the past 12 months, or just over 25 percent of the 2.28 million total jobs added. In April 2017, the goods-producing sectors accounted for about 13.7 percent of all payroll employment, meaning that they have since added jobs at almost twice the rate of all other sectors.
  • As BLS noted, average hourly earnings are only up 2.6 percent in the past year. But average weekly earnings are up 2.9 percent. Both of those figures still, after all this time, need to improve.

Overall, today’s news was okay, but not great. It’s nice that the unemployment rate and the number of unemployed went down, but the participation indicators weakened. It’s great that the black unemployment rate is at a record low level, but, again, participation levels are not encouraging. The number of payroll jobs added was good but not great. Wage increases, though improving on the Obama era, are still somewhat disappointing.

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3 Comments

  1. Tom, should we be setting a new normal in workforce participation with baby boomer retirements?

    Comment by Jim — May 4, 2018 @ 12:44 pm

  2. Okay, so in your opinion how good is the economy right now? Because it sure seems that except for Feburary’s BLS report, you keep talking it down.

    Comment by zf — May 4, 2018 @ 5:30 pm

  3. #1 and #2, the economy’s pretty good, but it’s still underachieving, and needs to get even better if we ever hope to turn the federal budget mess around. Observations are not “talking it down.”

    The participation numbers won’t ever come back to previous highs because of Boomer retirements. That said, even Zandi has acknowledged that there are people on the sidelines who one should expect would be drawn back into the workforce. But in the last two months, that hasn’t happened. dscott has made the point that there are a lot of Food Stamp recipients out of the 41 million who are STILL getting benefits (a number that’s way, way, way higher than it was in 2006 when unemployment hit a low of 4.4 percent) who aren’t getting back in (unless working under the table).

    As to the wages issue, dscott has also helpfully observed that H-2b “blue-collar” visas are STIL being approved, depressing wages.

    Also, contra Zandi, who said when questioned on Wednesday that he thought minimum-wage laws wouldn’t lead to much job loss in a low-employment job market because the market level of wages would rise to what the legislated minimums are anyway, I think we’re going to find that the most aggressive places (NYC, California, Seattle) are starting to see slower job growth, no job growth, or job declines in key sectors. The areas involved are big enough to negatively impact the national numbers.

    Comment by Tom — May 4, 2018 @ 7:18 pm

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