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The Daily Signal
Mixed News in
April Jobs Report
James Sherk
May 06, 2016
The Bureau of Labor Statistics’ April jobs report contained mixed
economic news. The agency reported wages grew healthily, overall
unemployment did not rise, and long-term unemployment fell slightly in
April. At the same time, job growth slowed and labor force
participation dropped. The labor market is not contracting, but it is
not growing as quickly as some analysts had believed either.
The Bureau of Labor Statistics’ payroll survey reported that employers
created 160,000 net new jobs last month.
This represents moderate job growth, but well below the recent pace of
job creation. Over the previous six months, employers added 243,000 net
new jobs a month. The job creation that did occur was heavily
concentrated in just three sectors: professional and business services
(+65,000), healthcare (+44,000), and leisure and hospitality (+22,000).
Most other sectors experienced tepid growth or slight job losses.
Revisions to the February and March reports also revealed that
employers created 19,000 fewer net jobs than previously believed.
The payroll survey had good news on wages. It reported that average
hourly earnings increased by 8 cents in April, and by 2.5 percent over
the past year. Inflation has grown by only 1 percent over the past 12
months, so this represents real wage gains for many workers.
The household survey showed unemployment remained unchanged at 5
percent in April. Encouragingly, long-term unemployment fell by 150,000
workers. However, labor force participation contracted sharply.
The February and March estimates had reported labor force participation
increasing modestly. Those gains entirely disappeared in April. The
labor force participation rate and the employment-to-population ratio
both dropped 0.2 points. The number of Americans no longer looking for
work increased by 562,000.
The ageing of the population and retirement of the baby boomers cannot
explain this drop: Labor force participation fell just as quickly among
25 to 54 year olds. More likely the February and March gains reflected
statistical noise—not actual economic improvement—which did not
reappear in the April estimates. Americans have not been re-entering
the labor market at the pace economists previously believed.
Economists had begun to get optimistic about labor market growth. The
April employment report suggests they should temper their expectations.
The last two months showed strong growth, but this month’s report
suggests some of that may have been nothing more than sampling noise.
Read this and other articles at The Daily Signal
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