Slow Growth: 115,000 Jobs Added In April, Unemployment Rate Down
By: Mark Lieberman, Five Star Institute Economist
The nation added 115,000 jobs in April, far below expectations and a drop from March’s revised payroll growth of 154,000, the Bureau of Labor Statistics reported Friday. The closely watched unemployment rate dipped again to 8.1 percent – its lowest level since January 2009 (7.8 percent) when President Obama took office – a function of a sharp drop in the nation’s labor force.
Payroll gains for February and March were revised, adding 19,000 to the February numbers and 34,000 to March. The average workweek remained at 34.5 hours – still below the level when the recession began in December 2007 (34.6) and average hourly earnings improved by one cent.
The number of people not in the labor force increased, as both the number of people employed and unemployed declined.
Economists had expected payrolls to grow by 165,000 in April and the unemployment rate to remain at 8.2 percent.
Even with the disappointing numbers, the report continued a string of increases in payroll jobs – the 19th straight month of job gains and the eighth straight month payrolls have increased by 100,000 or more. To keep up with population growth though the economy has to add between 140,000 and 150,000 jobs per month.
The number of people unemployed fell to 12,500,000, the lowest level since January 2009. The number of people employed dropped to 141,865, down 336,000 from January 2009, when President Obama took office.
While the unemployment rate dipped, the employment-population ratio, unconstrained by technical definitions of unemployment (that an individual be out of work, available for work and looking for work) fell to 58.4 percent. The inverse of the ratio – 41.6 percent – can be considered the “unemployment rate” for all persons over 16 regardless of whether they are available or looking for work. The ratio was 62.7 percent when the recession began and 60.6 percent when President Obama took office in January 2009.
The formula for the unemployment rate is to divide the number of people officially counted as unemployed (out of work, available for work and looking for work) by the total labor force (employed plus unemployed).
If the labor force change is driven by a drop in unemployment, the unemployment rate will decline. In April, the drop was due to a decline in both employment and unemployment.
Governments dropped 15,000 jobs, with most of the decline in local governments, who dropped 12,000 jobs. The federal government shed 4,000 jobs, while states expanded payrolls by 1,000.
The overall payroll growth was the weakest since last October when payrolls expanded by 112,000.
The 130,000 growth in private sector payrolls was the weakest since last August.
Payroll growth was concentrated in a handful of sectors: professional and business services added 62,000 jobs, retail trade 29,300 and education and health services 23,000.
The leisure and hospitality sector added 12,000 jobs. Retail trade and leisure and hospitality are the two lowest paying industry sectors. The number of construction jobs fell by 2,000.
Within the financial sector, which itself added a net 1,000 jobs in April, the number of credit “intermediation” positions – underwriters – fell by 3,200. The number of real estate jobs was essentially unchanged in April, up 300 from March.
The number of temporary jobs increased 21,100 after falling 9,400 in March. While temporary hiring is considered by some an entry ramp to permanent employment, it also suggests a lack of confidence by employers who are reluctant to make a commitment and swallow associated costs of having an employee.
The decline in the number of construction jobs was led by a drop of 2,500 in the number of construction workers for residential buildings though the number of “residential specialty trade contractors” increased by 6,300.
Employers in March also reduced average weekly hours, which allowed more individuals to remain employed. If average weekly hours had remained at the February level of 34.6, employment would have dropped an additional 381,000 in March.
The closely watched alternate measure of unemployment – which includes individuals working part-time for economic reasons and those “marginally attached” to the labor force – remained at 14.5 percent in April after falling to that level in March from 14.9 percent in February.
While the detailed breakdown of the unemployment data was largely encouraging, the number of persons unemployed for 5 to 16 weeks rose, pointing to an increase in long-term – 27 weeks or longer – unemployment in next month’s report.
The numbers of job-leavers, often an encouraging sign suggesting workers have confidence in their ability to find a new job, dropped in April after two straight monthly increases.
The unemployment rate for the prime home-buying age cohort – 25 to 34 – improved to 8.1 percent in April from 8.6 percent in March, while the unemployment rate for those over 55, generally the prime home-selling age cohort, increased to 6.3 percent in April from 6.2 percent in March.
Since its launch, DS News magazine has positioned itself at the forefront of an
evolving industry. Always current with the most up-to-date
default servicing news, DSNews.com keeps you informed through daily Web casts,
community forums, and a wide range of industry resources.