Headline nonfarm payrolls rose by 211,000 in April, versus an anticipated 190,000. Meanwhile, March’s data point was revised even lower to 79,000. The unemployment rate was lower at 4.4% (lowest since May 2007), while the participation rate was lower at 62.9%. There was a moderate rise of 162,000 in the group classified as “not in the labour-force,” following an increase of 23,000 in March. The U6 unemployment rate (an expanded measure of unemployment that takes into account marginally attached and part-time workers) was lower at 8.6% in April. The household survey showed an increase of 156,000 jobs in the month, following an increase of 472,000 in March. Meanwhile, the adjusted household survey (the BLS’s attempt to make it more comparable to the payroll survey) pointed to an increase of just 6,000, after a rise of 536,000 in March.
Private nonfarm average hourly earnings were 0.3% higher in April (0.3% for production and nonsupervisory workers) and follows 0.1% in March. Annually, they are now 2.5% higher (but only 2.3% for production and nonsupervisory workers); this indicates some moderate upward pressure. Private average weekly hours for production and nonsupervisory workers were 0.3% higher after being unchanged for seven consecutive months; they are now also 0.3% lower than a year ago. The 211,000 change in April’s payrolls was largely due to leisure and hospitality services (55,000), education and health service (41,000), professional and business services (39,000), and finance (19,000). There were no declines in any major sectors. Meanwhile, the mean duration of unemployment was higher at 24.1 weeks.
This month’s report for April was significantly better than the weather-impacted March figure of just 79,000. Companies continue to show high levels of confidence in the economic recovery, whilst also reporting some difficulties in finding qualified labour. The result is that we are starting to see increased upward pressure on wages and salaries, with a diminishing slack of shadow employment (the percentage of workers who would like to work but have stopped looking and those who are working part-time but would prefer to work full-time, or the U6 - U3 unemployment rates, inverse scale) against annual growth in wages and salaries and that wages have some catching up to do. The increase in this report has helped to confirm that much of the weakness we witnessed through the first quarter is likely to have been temporary, or simply further evidence of our long held belief of simply choppy consumer behaviour reflecting a moderate recovery that is better for some cohorts than others (which we discuss in today’s Economics Weekly). As far as the Fed is concerned, it still has one more employment report before its June FOMC meeting, which for the moment, still looks as though a rate increase is very much on the table.
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Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.