It’s a jobs report Dickens could love.
The April employment report released Friday paints pictures of both boom and bust.
Economists surveyed by Bloomberg had expected a gain of 218,000 jobs last month. Instead, the Bureau of Labor Statistics reported that employers added 288,000, the largest increase since January 2012. On top of that, the gains for the prior two months were revised upward by an additional 36,000 jobs. The unemployment rate dropped from 6.7 percent to 6.3 percent, the lowest since September 2008.
As the kids say: Boom!
“The headline numbers speak for themselves: This is easily the strongest labor market report in more than two years,” Harm Bandholz, chief U.S. economist at UniCredit Research, said in a note to clients.
The job gains in April were impressively widespread, too, with about two-thirds of the 278 industry groups tracked by the BLS seeing growth, according to J.P. Morgan economist Michael Feroli. Payroll gains have averaged 214,000 a month so far this year, up from 194,000 last year. And over the last three months, the gains have averaged 238,000, up from a three-month average of 178,000 as of March.
It’s just one month, but suddenly the jobs recovery looks significantly brighter. But…
The monthly employment report includes two separate surveys. The headline figure of 288,000 jobs added comes from a survey of businesses. The monthly survey of households, though, showed 73,000 fewer people employed. The unemployment rate, calculated from the household survey, only dropped as dramatically as it did because 806,000 people dropped out of the workforce.
Paul Ashworth, chief U.S. economist at Capital Economics, notes that the household survey data is notoriously volatile and that the labor force had grown by about 1.3 million people over the past few months. In that context, this month’s losses don’t look quite as grim, but the latest data still wipe out much of that growth. The labor force participation rate, which had crept up in recent months from 62.8 percent to 63.2 percent, reversed those gains entirely. "The period of stabilization in the participation rate in the six months ending in March now looks like a false dawn, and last month's plunge was broadly-experienced across demographic groupings," Feroli said in a note to clients.
Without the 0.4 percentage point drop in the participation rate, the unemployment rate would have risen to 6.8 percent, according to economists at BNP Paribas.
Meanwhile, average hourly earnings stayed flat, dropping the annual growth rate from 2.1 percent to 1.9 percent.
That all suggests a very different picture of the labor market. “Today's number have a good sear on them, but the middle is still looking a little raw,” as Guy LeBas, chief fixed income strategist at Janney Montgomery Scott, put it. At the very least, the details serve as a reminder that, even if improvement in the labor market is really reaccelerating, many Americans are still being left behind.
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