Disappointing (But A Few Bright Spots)

The BLS Jobs report for April was expected to be very strong, with payroll jobs rising by nearly a million. The reality fell far short of that.

Payroll jobs rose by 266,000 in April, and the growth in March was revised downward by nearly 150,000. Employment is leisure and hospitality rose quite substantially – by 331,000, as restaurant customers felt more comfortable going out. But, outside of leisure/hospitality, payroll jobs fell by 65,000.

The data from the household survey overall were somewhat flat as well, with unemployment barely changing (up from 6.0 to 6.1 percent) but labor force participation rising a bit. For those hoping that female labor force participation would recover as more children went back to school, the numbers were disappointing – female participation was flat overall and down a bit for adult females. On the other hand, men and especially Blacks enjoyed some labor force participation growth – with participation rising by half a percentage point for the latter.

The numbers of workers on permanent layoff (3.5 million) and in long-term unemployment (4.2 million) remained high, and it will take time for them to become reemployed.

Perhaps the most encouraging number in the report: hourly wages rose by 8% on an annualized basis. This is important because many employers have been complaining that they can’t find workers, and economists have responded that wages should be rising if that were broadly true. April’s wage numbers suggest that, in fact, the labor market has become tighter and employer complaints are not simply anecdotal.

Overall, then, the April jobs report sends a mixed message. On the one hand, the labor market is not recovering as consistently and rapidly as many had hoped; unemployment remains somewhat high and labor force participation depressed; women are not yet returning to work. But increasing wages suggest that the labor market has tightened in recent months, and some employers may really be finding it challenging to hire new workers.

We should never place too much weight on data from any one month, but the April numbers suggest that the labor market is recovering, albeit a bit more slowly than we had hoped.

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