Jobs Report Has More Bad News Than Good News
There was more bad news than met the eye to Friday’s jobs report, even beyond the bump up in the unemployment rate.
While the top-line number of 244,000 jobs created sounded great when it came off the tape, the internals were somewhat weaker. In particular, the household survey, which is an actual head count, suggested that the job creation barely kept up with the expansion of the labor force.
Under some circumstances, the rise in the jobless rate might have suggested good news—namely that many of the millions of discouraged workers were coming off the sidelines and looking for jobs, thus being added to the count according to the Labor Department’s byzantine method of composing the labor picture.
But nothing in the data suggests that.
The labor participation rate for April, in fact, stood unchanged at 64.2 percent.
Ditto for the actual amount of people out of work, which also was unchanged at 13.7 million.
Another measure of unemployment rose as well: the so-called “real” unemployment rate, which rose to 15.9 percent, up two-tenths from the prior month. The government calls the rate the U-6, and it measures not just those looking for work and unable to find jobs but also those “marginally” attached to the labor force and those who are working part-time but who want full-time work.
There were 8.6 million of those involuntary part-time workers, a number also unchanged from the previous month.
So what did change?
McDonald’s said it would hire 50,000 workers, but that was outside the April reporting period, so it didn't help these numbers.
Retail created another 57,000, including 27,000 in general merchandise stores.
Leisure and hospitality continued its torrid pace of job creation, adding 46,000 to bring its three-month addition to the burgeoning job market to 46,000.
Manufacturing? There continued to be a slow rise, with 29,000 news jobs recorded, while mining added a net 11,000, most in support positions.
Professional and business services had a sold month, adding 51,000 positions.
But the average workweek, considered a key barometer of economic activity, also did not move, staying stagnant at 34.3 hours. At the same time, wages actually edged higher, up three cents, or 0.1 percent, to $22.95.
Wages, which are looked at as important for inflation expectations, have gained 1.7 percent over the past year.
The upshot, then, is that there is reason to cheer, but also some things to fear.
“In stark contrast to the payrolls figures, the household survey measure suggests that employment fell by 191,000 last month, with the labor force expanding by 235,000,” Paul Ashworth, chief US economist at Capital Economics in Toronto, wrote in a note to clients. “Overall, very encouraging, although the rebound in the unemployment rate underlines how far we still have to go.”
Correction: An earlier version of this report incorrectly suggested that a good portion of last month's hiring came from McDonald's, which moved to hire 50,000 workers last month. That hiring came after the reporting period in the jobs report.
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