The key report ' the April employment report ' was disappointing. With only 115 thousand jobs added in April, this has raised a key question: Is this a slowdown in hiring, or were the January and February numbers boosted by the mild weather, and the apparently slowdown in March and April was just some "payback"?
If the former, hiring has slowed to about 135,000 per month (or less); if the later, the economy is adding about 200,000 jobs per month. Note: Through the first four months of 2012, the economy has added 803 thousand payroll jobs, a better pace than in 2011.
There are some positives we've discussed lately: it appears state and local government layoffs are slowing (although there was a little increase in April), residential investment (and construction employment) is increasing from a very low level, and it appears the drag from several sectors of non-residential investment will end mid-year. So my guess is job growth will pick up from the March and April pace, but remain sluggish compared to the slack in the labor force.
The other data was mixed. The ISM manufacturing index was above expectations, but the ISM service index was below. The Chicago PMI was soft, but auto sales were solid at a 14.4 million seasonally adjusted annual rate (SAAR).
Here is a summary in graphs:
' April Employment Report: 115,000 Jobs, 8.1% Unemployment Rate
Click on graph for larger image.
There were 115,000 payroll jobs added in April, with 130,000 private sector jobs added, and 15,000 government jobs lost. The unemployment rate declined to 8.1%. The participation rate decreased to 63.6% from 63.8% (a new cycle low) and the employment population ratio also decreased slightly to 58.4%.
The change in February payroll employment was revised up from +240,000 to +259,000, and February was revised up from +120,000 to +154,000.
This was below expectations of 165,000 payroll jobs added.
The second graph shows the job losses from the start of the employment recession, in percentage terms. The dotted line is ex-Census hiring.
This shows the depth of the recent employment recession - worse than any other post-war recession - and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis.
Since the participation rate has declined recently due to cyclical (recession) and demographic (aging population) reasons, an important graph is the employment-population ratio for the key working age group: 25 to 54 years old.
In the earlier period the employment-population ratio for this group was trending up as women joined the labor force. The ratio has been mostly moving sideways since the early '90s, with ups and downs related to the business cycle.
This ratio should probably move back to or above 80% as the economy recovers. So far the ratio has only increased slightly from a low of 74.7% to 75.7% in April (this was down slightly in April from March.)
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