The unemployment rate for April rose to 9.0% from the previous month's 8.8%. The briefing.com consensus was for 8.8% and its own estimate was for 8.9%.
The spike in the unemployment rate, however, was overshadowed by the impressive 244,000 increase in the non-farm payroll, which blew past the briefing.com consensus expectation of 185,000. This increase in job creation is the largest in 11 months. Likewise private sector payrolls rose 268,000, beating the consensus expectation of 200,000. This is the largest gain since February 2006. Today's report is an encouraging sign that the economic recovery remains on track.
Here is the lead paragraph from the Employment Situation Summary released this morning by the Bureau of Labor Statistics:
Non-farm payroll employment rose by 244,000 in April, and the unemployment rate edged up to 9.0%, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in several service-providing industries, manufacturing and mining.
The unemployment peak for the current cycle was 10.2% in October 2009. The chart here shows the pattern of unemployment, recessions and both the nominal and real (inflation-adjusted) price of the S&P Composite since 1948.
Unemployment is usually a lagging indicator that moves inversely with equity prices (top chart). Note the increasing peaks in unemployment in 1971, 1975 and 1982. The inverse pattern becomes clearer when viewed against real (inflation-adjusted) S&P Composite, with its successively lower bear market bottoms. The mirror relationship seems to be repeating itself with the current and previous bear markets.
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The second chart shows the unemployment rate for the civilian population unemployed 27 weeks and over. The January number is 4.1% - down from December's adjusted 4.1%. This measure gives an alternate perspective on the relative severity of economic conditions. As we readily see, this metric is significantly higher than the peak in 1983, which came six months after the broader measure topped out at 10.8%.
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The next chart is an overlay of the unemployment rate and the employment-to-population ratio (age 16 and over).
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The inverse correlation between the two series is obvious. We can also see the accelerating growth of two-income households in the early 1980s. The recent ratio low of 58.2% in November 2010 and December 2009 was a level not seen since August 1983. In fact, those recent lows were almost back to the 58.1% ratio of March 1953, when Eisenhower was president, the Korean War was still underway, and rumors were circulating that soft drinks would soon be sold in cans. The latest ratio, for April 2011, is 58.4%, down 0.1% from last month.
The employment-population ratio will be interesting to watch going forward. The first wave of Boomers will be a downward force on this ratio. The oldest of them were eligible for early retirement when the Great Recession began, and the Boomer transition to the retirement will accelerate over the next several years.
The last chart is one of my favorites from CalculatedRisk. It shows the job losses from the peak employment month since World War II. Note the addition of the dotted-line alternative for the current cycle, which shows unemployment excluding the temporary census hiring.
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The start date of 1948 was determined by the earliest monthly unemployment figures collected by the Bureau of Labor Statistics. The best source for the historic data is the Federal Reserve Bank of St. Louis.
Here is a link to a Google source for customizable charts on U.S. unemployment data (not seasonally adjusted) since 1990. You can compare unemployment at the national, state and county level.
