The job market is clearly still very weak. This morning’s non-farm payrolls report showed an expansion of just 115K jobs. We’re still operating well below capacity as the economy remains fragile at best. The good news is we’re growing. The bad news is we’re not growing nearly fast enough. Private payrolls jumped 130K and public payrolls declined 15K. The government is, despite its large budget deficit, dragging down growth in the labor market.
When compared with the 2002 recovery we’re operating about 30% below the rate of change seen in that recovery. From the 2002-2007 period (official recession end and start dates) we averaged 97K new jobs per month. This recovery so far is averaging just 73K jobs per month. 33 months into the 2002 recovery we were averaging substantially more than that with regular readings in the 250K+ range. This month’s reading of 115K shows a sharp deceleration from the last few months which had shown some signs of life.
All in all, it’s just more of the same old muddle through, boring low growth economy. It’s not a nightmare. But it’s also nothing to write home about. Muddle through continues….
Econoday has the details on today’s report:
“April jobs were softer than expected but there were upward revisions and the unemployment rate dipped to 8.1 percent from 8.2 percent in March. Seasonality issues apparently are still at play. Payroll jobs in April increased only 115,000, following increases of 154,000 in March (originally 120,000) and 259,000 in February (prior estimate up 240,000). The net revisions for February and March were up 53,000. Analysts expected a 165,000 increase for April.
Private payrolls rose 130,000 in April after a 166,000 increase the prior month. The consensus forecast was for a 178,000 advance.
Goods-producing industry employment rose 14,000 after a 38,000 boost in March. For the latest month, manufacturing increased 16,000; construction dipped 2,000; and mining edged up 1,000.
Private service-providing industry employment rose 116,000, following a 128,000 gain in March. The notable positive was a 62,000 increase in professional & business services. Retail trade rose 29,000 while health care gained 19,000 and leisure & hospitality increased 12,000.
The public sector continued to downsize with a 15,000 drop in government employment, led by a 10,700 decline in local government education.
Average hourly earnings were flat, following a 0.2 percent gain in March. Analysts expected a 0.2 percent gain. The average workweek for all workers in April was steady at 34.5 hours. Expectations were for 34.5 hours for April.
From the household survey the dip in the unemployment rate to 8.1 percent reflected a 342,000 decline in the labor force. Household employment fell 169,000. The median market forecast for the unemployment rate was for 8.2 percent in April.”
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.