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Employment: Solid Job Gains, Hints of Cracks

May 8, 2022
Bottom Line: Job gains in April were even better than expected, matching March's gains, which were revised only slightly to 428k. Gains were broad-based, with hiring rebounding notably in the warehousing and transportation-related sectors. Manufacturing job gains were also robust. Leisure and hospitality gains have decelerated but remained historically strong in April. The unemployment was unchanged, and we should note that the household survey (different from the establishment survey and used to calculate the unemployment rate) showed a decline in employment as the labor force also fell in April. Average hourly earnings were up 0.3%, a touch lower than expected, but positive revisions to earlier data offset that miss. Overall, this was another solid labor report, but perhaps not quite as strong as in prior months as the household survey gave hints of weakness for the second month in a row. Still, given the  Fed's focus on the strength of the labor market as a reason to tighten monetary policy, this will do little to dissuade the notion the Fed will likely follow its 50p hike earlier this week with more 50bp hikes in June, July, and September.
Payroll Employment
rose by 428k in April, compared with market expectations for an increase of 380k. The prior 2 months were revised, lower in March by 3k and lower in February by 36k.
Government jobs ROSE by 22k. Consequently, private sector jobs ROSE by 406k.   Overall employment is now 4.6% ABOVE its year-ago level,  Over the past 12 months, 6,620k jobs have been created.In April, the job gains were in:
  • Trade, Transportation & Utilities (+75k with 29k of those in Retail Trade),  
  • Professional & Business Services (+41k with the addition of 2.4k in Temp Help Services),  
  • Leisure & Hospitality (+78k),
  • Manufacturing (+55k),
  • Education & Health Services (+41k),
  • Financial Activities (+35k),
  • Government (+22k), and
  • Information (+12k).
The Unemployment Rate was UNCHANGED in April at 3.6%, compared with market expectations for a small decline to 3.5%.
Household employment fell by 353k while the labor force declined by 363k, resulting in a decrease in the number of unemployed of 11k.

The Labor Force Participation Rate
FELL by 0.2 percentage points to 62.2%.
The Employment-Population Ratio FELL by  0.1 percentage points to 60.0%. The number of people Working Part-Time for Economic Reasons FELL by 153k to 3,996k. while Long-Term Unemployment ROSE by 55k to 1,483k (accounting for 25.0% of the unemployed),  while the Mean Duration of Unemployment ROSE by 0.8 weeks to 25.0 weeks.There are now 5.9 million people officially unemployed. In addition, there are another 5,859k people who say they want a job but are not currently looking for one.  Finally, another 3,996k people are working part-time because of slack economic conditions.
The Index of Aggregate Hours ROSE by 0.4%, combining the solid gain in private payroll employment and the steady workweek.
Hourly Earnings ROSE by 0.3% in April, below market expectations of 0.4%. Hourly earnings are now 5.5% ABOVE their year-ago level.

Weekly Earnings
also ROSE by 0.3%, the result of the change in hourly earnings and a steady workweek. Weekly earnings are now 4.6% ABOVE their year-ago level.

The Average Workweek
was UNCHANGED at 34.6 hours, BELOW the market consensus at 34.7 hours.
Article by Contingent Macro Advisors