Positives abound in this report on the April employment gain…
The April employment gain of 288,000 blew the doors off expectations of economists
… solidifies the idea of economic momentum this spring
…Federal Reserve probably has little reason to rethink its tapering policy
But, it ain’t all roses …
The ‘5 key takeaways’ from the on the April employment report, via the Wall Street Journal:
The positives:
1. Upward revisions to February and March mean the three-month moving average of jobs gains is at the highest rate since early 2012
- The demand for labor has turned the corner, and economists are likely lifting their estimates on how fast the U.S. economy is expanding in the second quarter, after it barely grew in the first
2. Another sign the demand for labor is improving is the breadth of job gains
- The widening spread in labor demand is a good omen for capital spending
—
The not so positives:
3. “The unexpectedly large drop in the jobless rate was a head-fake when it comes to signaling labor-market improvement. That’s because the decline was mainly caused by 806,000 people dropping out of the labor force which pulled the rate to 6.3% from 6.7% in March. The unemployment rate rarely moves in such a large increment. The last time it fell 0.4 percentage point was December 2010. A bounce-back in the May rate shouldn’t be a surprise a month from now: news of the strong pace of April hiring is likely to cause some discouraged workers to look for work again.”
4. Another troubling sign in the April jobs report is the lack of growth in hourly pay
- Average wage stayed at $24.31 in April, and is up only 1.9% from a year ago
- The flat hourly wage reading partly reflects the mix of jobs—with more hiring taking place in lower-paying industries like retail and hospitality compared to high-wage manufacturing.
- No acceleration in the yearly growth of wages argues that there is more slack in labor markets than is suggested by the 6.3% unemployment rate
5. Five years into recovery, temporary hiring continues to account for an over-sized share of private payroll growth
- According to Labor Department data, average wage for temp positions is up 3.1%, better than overall private pay. But at $16.22 an hour, the pay is about $8 below what’s earned per hour by a typical private workers.
The journal article is here (ungated) : 5 takeaways from the April employment report
