Employment Situation: Modest Job Creation, Unemployment Unchanged

May 6, 2016
Bottom Line: Bottom Line: Payroll employment rose by 160k in April, compared with market expectations for an increase of 200k, its lowest level since September. There were slight revisions to the previous two months which subtracted a total of 19k jobs. Job creation has averaged 224k over the past 12 months, slightly below the past 18 months average of 230k. It appears that the trend job creation rate is now about 200k per month (3 month average). The unemployment rate was unchanged in April as household employment dropped slightly less than the decline in labor force. Over the past year, the unemployment rate has declined by 0.4 percentage points, the result of 2,495k more people finding jobs as 1,892k more people entered the labor force. Both hourly and weekly earnings rose moderately in April after a modest increase in March. Payroll Employment ROSE by 160k in April, compared with market expectations for an increase of 200k. The prior 2 months were revised, lower in March by 7k and lower in February by 12k. Government jobs FELL by 11k. Consequently, private sector jobs ROSE by 171k. Overall employment is now 1.9% ABOVE its year ago level. Over the past 12 months, 2,692k jobs have been created. In April, the job gains were in Trade, Transportation & Utilities (+8k with -3k of those in Retail Trade), Professional & Business Services (+65k with the addition of 9k in Temp Help Services), Education & Health Services (+54k), Leisure & Hospitality (+22k), Financial Activities (+20k), Other Services (+5k), Manufacturing (+4k) and Construction (+1k). Jobs were shed in Government (-11k). The Unemployment Rate was UNCHANGED in April at 5.0%, compared with market expectations for a small decline to 4.9%. Household employment fell by 316k while the labor force declined by 362k, resulting in a decrease in the number of unemployed of 46k. The Labor Force Participation Rate FELL by 0.2 percentage points to 62.8%.The Employment-Population Ratio FELL by 0.2 percentage points to 59.7%. The number of people Working Part-Time for Economic Reasons FELL by 158k to 5,874k while Long-Term Unemployment FELL by 150k to 2,063k (accounting for 26.0% of the unemployed), while the Mean Duration of Unemployment FELL by 0.7 weeks to 27.7 weeks. There are now 7.9 million people officially unemployed. In addition, there are another 5,793k people who say they want a job but are not currently looking for one. Finally, another 5,874k people are working part-time because of slack economic conditions. Hourly Earnings ROSE by 0.3% in April, in line with market expectations. Hourly earnings are now 1.7% ABOVE their year ago level. Weekly Earnings also ROSE by 0.6%, the result of the change in hourly earnings and a longer workweek. Weekly earnings are now 2.5% ABOVE their year ago level. The Average Workweek ROSE by 0.1 to 34.5 hours, in line with the market consensus. The Index of Aggregate Hours ROSE by 0.4%, combining the modest gain in private payroll employment and the longer workweek. On a year-over-year basis, Hourly and Weekly earnings are growing modestly and on a trend that has been relatively flat over the past 3 years.
Article by contingentmacro