Saturday, May 3, 2014

April jobs very good, but you should still pause

With it being the first Friday, it means another U.S. jobs release. And topline numbers featured a big increase - 288,000 jobs added (273,000 private sector), and upward revisions of 36,000 the previous two months, so 324,000 added from the last totals we had. It looks like jobs have sprung back from the slowdown we had in the Winter, and the last 3 months look very good.

February-April 2014 job growth
Feb 2014 +222,000 total, +201,000 private
March 2014 +203,000 total, +202,000 private
April 2014 +288,000 total, +273,000 private
LAST 3 MONTHS 713,000 total, +676,000 private

That's a year-long rate of increase for total jobs of 2.852 million, which compares to 2.33 million for all of 2013. Meaning if anything, the last 3 months show job growth speeding up. So up much for Obamacare being a "jobs killer", eh?

Good news also came with a drop to 6.3% in the unemployment rate, down 0.4% from March. Unemployment rate has now dropped 2.8% in the last 36 months, and is at its lowest point since September 2008 (the month Lehman Brothers went bankrupt and triggered the "financial crisis" part of the Great Recession). This reality should also be noted in light of Scott Walker and WisGOP bragging about "reducing unemployment" in Wisconsin, as Wisconsin's rate has only dropped 1.7% in the same time period compared to the 2.8% in the U.S.

All of these are signs of a continued growing economy, with the possibility of things heading to the next level of growth if this holds up for the next couple of months. Any concerns some may have had about a possibility of recession with the flatlined 0.1% GDP growth for 1st Quarter 2014 should go to the background for now. This is all good news.

But there were a couple of things that should calm your enthusiasm. The drop in unemployment rate was largely due to a drop in the participation rate from 63.2% to 62.8%. This drop in the participation rate meant the employment-population ratio didn't go up at all, and stayed at 58.9%. Yes, some of this is a correction to the previous months, as 484,000 have been added to the labor force since thE start of the year, and the household survey indicates 1.080 million more people are "employed" in that same time period, so the 0.4% drop in unemployment over that full time period seems to still show some real growth. But it's not symptomatic of the boom that these April topline numbers might have indicated.

The other concern I have is that average private sector hourly and weekly earnings were unchanged for April, at $24.31 and $838.70, respectively, and average weekly wages are only up 2.2% before inflation (about 1.0% after). This still continues to be relatively stagnant, and shows that companies continue to avoid raising pay to their employees if they can avoid it in any way (much like Senate Republicans and the minimum wage, when you think about it).

But in all, the April report is a postivie one, especially since it shows that things are starting to thaw along with the weather (and other economic reports have been backing that up), so the 0.1% 1st Quarter GDP figure seems to be a starting-year fluke instead of something more ominous. This also means that us in Wisconsin SHOULD EXPECT sizable job growth of more than 5,000 in the next jobs report later this month, or else it means we are falling further behind.

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