Unemployment Rate Drops to 3.9%; Economy Adds a Disappointing 164K jobs in April; Wage Growth Remains Weak

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Unemployment rate in April DROPPED to9 percent after six straight months at 4.1 percent;
  • Unemployment rate for Blacks dropped to 6.6 percent, a record low, from 6.9 percent in March;
  • Number of payroll jobs INCREASED 164,000 in April; the number of multiple jobholders increased 58,000, 35.4 percent of the total increase in jobs;
  • Private sector jobs INCREASED 168,000, which means government jobs (all levels) DIPPED 4,000;
  • Average weekly earnings ROSE $1.38 in April to $925.98, a 2.5 percent year-year gain;
  • Average hourly earnings GREW 4¢, in March to $26.84 a 2.6 percent annual increase;
  • Prior month job totals REVISED UP net 30,000: March’s 103,000 increase was REVISED UP by 32,000 to a growth of 135,000 jobs but February’s last-reported 326,000 job gain was trimmed by 2,000 to 324,000;
  • Average weekly hours REMAINED at 34.5 in March;
  • Labor force – DROPPED 236,000 in April after contracting 158,000 in March;
  • The number of persons NOT in the labor force INCREASED 000; labor force participation rate FELL BACK 0.1 percentage points to 62.8 percent;
  • Employment-Population ratio DROPPED at 60.3 percent in April from 60.4 percent in March;
  • All industry sectors gained jobs except wholesale trade which shed 9,800 jobs; Number of construction jobs INCREASED 17,000, including 7,500 new residential construction jobs;
  • Number of retail jobs increased 1,800 and leisure-and-hospitality jobs increased 18,000.

Trends:

  • The 2.5 percent (year-year) increase in average weekly earnings marked a sharp decline from 3.2 annual growth in March
  • Monthly job growth has averaged 187,000 in the 15 months since President Trump took office; in the last 15 months of the Obama administration, the economy added an average of 209,000 jobs per month;
  • Number of persons working full-time increased 319,000 in April while the number working part-time dropped 350,000.
  • Number of new entrants to the labor force (as unemployed) was 623,000 in April, down slightly from 625,000 in March;

Data Source Bureau of Labor Statistics

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The April report suggested the March report was not a fluke. March data showed a gain of 135,000 new jobs after an outsized 324,000 increase in February and had originally been seen as regression to the mean but April’s numbers were perhaps a bit more realistic

The fall in the unemployment rate was not unexpected given the trend of the weekly reports on new claims for unemployment insurance, Claims have generally been falling since the beginning of the year as employers grow increasingly frustrated in their ability to fill vacant positions; as a result, they hold on to the staff they have.

Employers though have not been using wages to increase or maintain their workforce. With few, if any, wage increase, employees have little incentive to quit one job to take another. Indeed, the number of “job leavers,” (the BLS term for quits, dropped to 815,000 in April from 864,000 in March.

That annual increase in earnings – both hourly and weekly – remained relatively weak, is a double quandary not only because of the tight labor market but because the two lowest paying industry sectors – retail and leisure-and-hospitality added just 11.0 percent of the total number of new jobs. As recently as six month ago, retail and leisure-and-hospitality represented 40.6 percent of new jobs.

Employment in April (as distinct from jobs) grew a scant 3,000 while the number of persons unemployed dropped 239,000. The shrinking number (unemployed) and a shrinking denominator (employed plus unemployed) resulted in the drop in the unemployment rate.

Another indicator of a tight labor market in an otherwise expanding economy, average weekly hours, remained flat at 34.5 for the third straight months. An increase in average weekly hours typically portends more jobs.

Two sectors which perennially lead job growth, dis so again in April: professional and business services added 54,000 new jobs compared with an average monthly growth of 43,000 in the last year; health care added 30,000 jobs just under the monthly average growth of 32,000 in the last year.

The number of temp jobs, often considered a leading indicator of overall job growth, increased 10,300, slightly ahead of the average growth of 9,500 i9n the last 12 months.

Hear Mark Lieberman every Friday morning at 6:20 am on The Morning Briefing on POTUS on Sirius-XM 124. You can follow Mark Lieberman on Twitter at @foxeconomics.

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