Seeking Alpha
What is your profession? ×
Professor, economy, macro
Profile| Send Message|
( followers)

The report on the U.S. employment situation for April released today by the Bureau of Labor Statistics contained some good news, with the unemployment rate falling to 7.5 percent, its lowest since late 2008. Payroll jobs rose by a better than expected 165,000, and upward revisions to previous months made job market performance for the late winter look much better than previously reported. Certainly, weak spots remain in the employment situation, but on the whole, the report was stronger than expected.

Although the decrease in the unemployment rate was less than a full percentage point, it was a “good” decrease in that the absolute numbers of unemployed workers fell while both the number of employed workers and the size of the labor force increased. That contrasts with the less favorable situation in March, when the unemployment rate fell only because the labor force decreased faster than the number of workers with jobs. The number of employed workers, as measured by the household survey, increased by 293,000 from March to April. That number differs from the job gain of 165,000 reported in the separate payroll survey partly because of differences in methodology and partly because the payroll survey excludes farm workers and the self-employed.

(click to enlarge)

The BLS also publishes a broader measure of employment stress known as U-6. The numerator of U-6 includes discouraged workers and involuntary part-time workers along with those counted as unemployed according to the standard measure. The denominator includes people who are marginally attached to the labor force, along with those counted in the labor force, according to the standard measure. U-6 increased slightly in April, from 13.8 to 13.9 percent, although it remains near its low for the recovery.

The uptick in U-6 was largely due to an increase in the number of workers who were working part-time for economic reasons. Often called involuntary part-time workers, they include people who can’t find full-time work or have had their hours cut back. As the following chart shows, the number of involuntary part-time workers has been high throughout the recession and recovery, although its trend has been downward over the past two years.

(click to enlarge)

Turning now to the survey of payroll jobs, the good news was not just a moderate gain of 165,000 jobs for April, but also strong upward revisions for February and March. As the next chart shows, the report included an upward revision of job gains for February to 332,000, making that the best month in almost four years. Job growth for March, first reported as a discouragingly low 88,000, was revised to 138,000. The revisions brought total job gains for the first four months of 2013 to 783,000, slightly more than the 764,000 new jobs for the last four months of 2012.

(click to enlarge)

The private sector added 176,000 new jobs in April. All of those came in the service sector, with retail trade, business services, and healthcare services showing the strongest gains. Goods-producing industries lost 9,000 jobs for the month, partly offsetting gains reported for March. The government sector lost 11,000 jobs in the month, continuing a long trend. Of those, the federal government shed 8,000 jobs in March, with the remainder divided about equally between state and local government.

The April jobs report gives an early hint of the trend of economic activity in the second quarter of 2013. Coming on the heels of an advance estimate of 2.5 percent GDP growth for the first quarter, it suggests that the U.S. economy continues to move forward at a stronger pace than many other advanced economies.