April Jobs Report Eases Fears of a Spring Swoon

Suddenly, the spring swoon predicted for the U.S. economy looks a little less frightening.

The April employment situation report from the Bureau of Labor Statistics showed a better-than-expected gain of 165,000 jobs and an unemployment rate that surprisingly fell to a four-year low of 7.5 percent – without a concomitant drop in the labor force participation rate.

Not only that, the previous two months’ gains were revised upward by a total of 114,000 jobs.

 

“All things considered, 165,000 isn't the biggest monthly gain in payrolls you'll ever see, but it's enough to assuage concerns that the economy has stalled again,” economist Paul Ashworth of Capital Economics wrote to clients this morning.
 
Or as Jim O’Sullivan of High Frequency Economics put it, “What spring swoon?”

More important than any one number from Friday’s report, though, is what the new data collectively say about the broader economic trend lines. The initial jobs report for March, which showed a disappointing 88,0000 jobs added that month, had spurred fears that economy would sputter through spring for the third year in a row, with the slowdown this time caused by the January expiration of the payroll tax holiday and the effects of the federal government’s sequestration cuts. Economic data besides the dismal jobs number also suggested the slowdown may have been taking hold.

Those fears haven’t been erased by one relatively strong employment snapshot. Economists still warn that the strain from those fiscal changes is likely to be seen in the coming months.

“Though the better than expected April report allayed some of the fears of a softening second quarter, the impact of sequestration has not yet hit the economy in full force,” Moody’s Analytics economist Sophia Koropeckyj warned Friday. Other economists also point out that the 165,000 average payroll gain for March and April already represents a slowdown from the 236,000 average gains of the previous three months.

But the April data provides a dose of Xanax to ease some building anxieties, suggesting that the fiscal tightening hasn’t entirely squeezed job growth out of the economy, even if large areas of weakness remain. “The message,” O’Sullivan wrote, “is that last month's weaker-than-expected report was largely a false alarm.”