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April Jobs Report: Seeing Evidence Of A Tight Labor Market


  • The jobs report was weaker than was economists hoped, although the unemployment rate did decline to a 17-year low.
  • Unlike the overwhelming bulk of the recovery thus far, the majority of the job creations in April were in high-paying sector.
  • This did not increase average hourly earnings as much as expected, as the increase appears to be driven mostly by an increasing quantity of overtime hours.
  • The labor force participation rate remained static, which could be somewhat concerning for forward economic growth.
  • We definitely see signs of a tight labor market here, although the amount of potential labor still sidelined could have major effects one way or another.

Well, it has been another month since the last jobs report, so the Bureau of Labor Statistics released yet another jobs report on the first Friday in May, right on schedule. The headline numbers were mixed as the unemployment rate declined to 3.9%, its lowest level in seventeen years, but the job creation numbers were lower than what economists expected. We did certainly see some positives in this report, including the improvement of a trend that I have long been critical of.

According to the Bureau of Labor Statistics, the United States economy created 164,000 non-farm jobs in April, somewhat worse than the economist consensus of 193,000. It is important to look at the industries in which jobs were created. When we do, we do see some evidence to support the economic recovery narrative that the mainstream media has been trumpeting since the early days of the Obama presidency. Here are the industries that created jobs in April and how many each created:

Source: Zero Hedge

As we see here, the top three job creating industries in April were professional & business services, education & health, and manufacturing. With the exception of some healthcare and education jobs, these are overall middle-class jobs that are easily capable of supporting a family in relative comfort. This is therefore a very desirable shift from the part-time and low-paying jobs (primarily leisure & hospitality and retail trade) that have dominated the current economic recovery since it began. These three industries combined accounted for approximately 98,700 of the 164,000, or 60.2%, total jobs created during the month. We also saw notable contributions from mining and logging, information, and financial activities sectors. These sectors are also relatively high-paying, which likewise shows that the economy has finally begun to create worthwhile jobs for skilled workers seeking to support a middle-class lifestyle.

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