Comments on April Employment Report

The headline jobs number at 263 thousand for April was above consensus expectations of 180 thousand, and the previous two months were revised up 16 thousand, combined. The unemployment rate declined to 3.6%. Overall this was a strong report.

Earlier: April Employment Report: 263,000 Jobs Added, 3.6% Unemployment Rate

In April, the year-over-year employment change was 2.620 million jobs. That is solid year-over-year growth.

Average Hourly Earnings

Wage growth was close to expectations. From the BLS:

"In April, average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $27.77. Over the year, average hourly earnings have increased by 3.2 percent."

This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 3.2% YoY in April.

Wage growth has generally been trending up.

Prime (25 to 54 Years Old) Participation

Since the overall participation rate has declined due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle.

The 25 to 54 participation rate was declined in April at 82.2% from 82.5% in March, and the 25 to 54 employment population ratio was decreased to 79.7%.

Part Time for Economic Reasons

From the BLS report:

"The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 4.7 million in April. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or because they were unable to find full-time jobs."

The number of persons working part time for economic reasons increased in April to 4.654 million from 4.499 million in March.   The number of persons working part time for economic reason has been generally trending down.

These workers are included in the alternate measure of labor underutilization (U-6) that was unchanged at 7.3% in April.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.230 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.305 million in March.

Summary:

The headline jobs number was above expectations, and the previous two months were revised up slightly.  The headline unemployment rate declined to 3.6%.

This was a strong jobs report.   The economy added 820 thousand jobs through April 2019, down from 879 thousand jobs during the same period in 2018.   So it appears job growth has slowed somewhat, but is still solid.

The decline in the participation rate lowered the unemployment rate.  Note that sometime soon the overall participation rate will start another steady decline due to demographic factors.   The overall participation rate has been moving sideways for several years, as the expansion has offset the demographics factors.  

from Calculated Risk http://bit.ly/2PJPOv6