Employment Report: More Jobs But Fewer Hours and Lower Weekly Earnings

The Bureau of Labor Statistics reported that, in April, employers added 165,000 new positions, with the unemployment rate edging down to 7.5 percent from 7.6 percent. This compares to expectations for 145,000 new jobs, and some economists had expected even fewer new jobs after the weak ADP jobs report on Wednesday. The revisions were positive, offsetting concerns about the weak March payroll report. Job growth for February was revised from +268,000 to +332,000, and the change for March was revised from +88,000 to +138,000. With these revisions, employment gains in February and March combined were 114,000 higher than previously reported. Many jobs created were in food services and retail at one end of the spectrum, and professional jobs at the other. The category of professional and business services added 73,000 jobs in April and has added 587,000 jobs over the past year. In a subset of this category, temporary help services added 31,000 jobs. This may reflect a desire of businesses to not commit to adding full-time staff, rather than necessarily being a leading indicator as it had been in years past. Also in this category, professional and technical services added 23,000 in addition to 7,000 new management jobs that were created. Food services and drinking places increased employment by 38,000 over the month, with an average job growth of 25,000 per month over the prior 12 months. Retail trade employment increased by 29,000 in April. The industry added an average of 21,000 jobs per month over the prior 12 months. Health care added 19,000 jobs in April. Employment changed little over the month in construction, with small offsetting movements in the residential and nonresidential components. Construction gained an average of 27,000 jobs per month over the prior six months. Manufacturing employment was unchanged in April. Employment in other major industries, including mining and logging, wholesale trade, transportation and warehousing, financial activities, and government, showed little change over the month. Employers cut hours in some areas. The average workweek for all employees on private nonfarm payrolls decreased by 0.2 hour in April to 34.4 hours. Within manufacturing, the workweek decreased by 0.1 hour to 40.7 hours, and overtime declined by 0.1 hour to 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls decreased by 0.1 hour to 33.7 hours. In April, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $23.87, a 0.016 percent gain. Over the year, average hourly earnings have risen by 45 cents, or 1.9 percent. In April, average hourly earnings of private-sector production and nonsupervisory employees edged up by 2 cents to $20.06. With the drop in the workweek, average weekly earnings fell to $821.13 from $824.52, a 0.4 percent drop. With the drop in hours worked, the gain in the number of employees and the slight increase hourly pay, the index of aggregate weekly payrolls fell 0.2 percent. This will be included in other data on personal incomes. The labor force grew by 210,000, with the population growing by 180,000, and the labor force participation rate was 63.3 percent in April, unchanged over the month. However, it is decrease from 63.6 percent in January. The number of employed workers, per the household report, increased by 293,000 and the employment-population ratio, 58.6 percent, ticked up from 58.5 percent, but has shown little movement, on net, over the past year. The number of unemployed workers fell 83,000. The broad U-6 rate ticked up to 13.9 percent from 13.8 percent. This reflects the fact that the number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 278,000 to 7.9 million, largely offsetting a decrease in March. And 2.3 million persons were marginally attached to the labor force, essentially unchanged from a year earlier. Among the marginally attached, there were 835,000 discouraged workers in April, down by 133,000 from a year earlier. Both the number of marginally attached and discouraged workers ticked up slightly from March, but the data are not seasonally adjusted. In April, the number of long-term unemployed (those jobless for 27 weeks or more) declined by 258,000 to 4.4 million; their share of the unemployed declined by 2.2 percentage points to 37.4 percent. Over the past 12 months, the number of long-term unemployed has decreased by 687,000, and their share has declined by 3.1 percentage points. This is good news, but we don't know how many of them secured employment vs. dropped out of the labor force, and are thus no longer counted as unemployed.