The unemployment rate plummeted in April to the lowest point in more than five years as the U.S. economy added an unexpectedly large 288,000 jobs during the month.
All but the most optimistic of economists expected the jobs numbers to be strong, but nowhere near 300k, with the consensus of surveys placing the increase in the range of 210,000 to 220,000. The unemployment rate was forecast to decline only by a tenth of a point from March’s 6.7 percent.
Instead, the Bureau of Labor Statistics report released this morning said unemployment dropped almost across the board, with lower rates for whites, blacks, Hispanics, men, women and teenagers. However, the sharp decline in the unemployment rate was due mostly to the 806,000 who left the labor force and were therefore not counted as unemployed.
(Calculating the unemployment rate is tricky, and depends on how people respond to a Labor Department survey regarding when and if they looked for work or were employed during a particular period of time. Those who report neither looking for work nor working are considered no longer in the workforce.)
Further tempering the enthusiasm of investors and analysts was the lack of growth in hourly wages (meaning consumer spending power didn’t improve). The average hourly wage of all non-farm workers in April remained at $24.31. In the last year, the average has increased by 1.9 percent. A second cautionary indication was that the average workweek for all workers stayed at 34.5 hours; for manufacturing workers. the workweek declined by .2 hours.
Despite the statistical tempering of the decline in the unemployment rate and the earnings and workweek hours — all of which are a snapshot of a single month — the job growth is being seen by economists as a positive sign of an economy picking up steam after a brutal winter.
Michelle Meyer, senior United States economist at Bank of America Merrill Lynch, told The New York Times that the jobs report and other evidence points to improvement. “The second quarter seems to be starting out on a healthy footing.”
The government report showed the jobs increase was widespread across most occupations and industries. The BLS also adjusted upward job numbers for February and March by a net 36,000. Private sector hiring came in at 273,000 new jobs.
Most of the growth came, as is usual, in the service sector, which increased by 220,000. Manufacturing added 12,000 jobs, while the goods producing sector as a whole grew by a total of 53,000 jobs.
The Professional and Business services category was the biggest gainer adding 75,000 jobs. The industries covered by this group include temp employment, which is a closely watched segment since hiring here is considered of future, perm hiring. Temp agencies added 24,000 workers.
Also in the professional and business services category is counted management jobs, which increased by 11,900, and professional jobs, such as accounting, legal, and computer. These grew by a net 25,100.
Other significant increases came in:
- Retail, up by 34,500 with 10,500 coming from hiring by clothing and clothing accessories stores. That offset a similar cut in jobs in electronics and appliance stores.
- Healthcare +18,700;
- Bars and restaurant +32,600;
- Local government +17,000.