April 2017 Jobs Review
Jobs Review Snapshot
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DetailsThe Bureau of Labor Statistics (BLS) reports a 211,000 gain in nonfarm payroll jobs, of which 194,000 were in the private sector. The largest job gains came from leisure and hospitality (+55,000), education and health services (+41,000), and business and professional services (+39,000). Job losses were recorded in information services (-7,000) and durable goods manufacturing (-3,000). The government sector added 17,000 jobs. |
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| The employment-to-population ratio ticked up from 60.1% to 60.2%. The overall labor force participation rate (LFPR) ticked down from 63% to 62.9%. The prime working-age (25 to 54) labor force participation rate remained unchanged at 81.7%; during the previous business cycle’s expansion (December 2001 to November 2007), it averaged 83%.[1] | |
| The headline unemployment rate (U-3) decreased from 4.5% to 4.4%, the lowest since May 2007. In April, the “real” unemployment rate (U-6)[2] decreased from 8.9% to 8.6%. The last time the U-6 was this low was in late 2007. The number of people who want to work full time but could find only part-time jobs declined by 151,000. | |
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For all private-industry workers, average hourly earnings (AHE) and average weekly earnings (AWE) are both 2.6% higher.[3] The equality implies that hours worked were little changed for the month (AWE equals AHE times average hours worked). The AHE and AWE of production and nonsupervisory workers increased from last year by 2.3% and 2.6% respectively. JEC prefers this measure of wages as more representative of the average worker.[4] During the previous expansion, the AHE and AWE of production and nonsupervisory workers each increased an average of 3% per year, while averaging only 2.1% and 2.4%, respectively, during the current expansion. People worked more hours in April, which raised average weekly earnings growth.
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Context
Following a disappointing March jobs number (generally attributed to bad weather), the jobs number rebounded and exceeded expectations for April. Job gains have exceeded 200,000 in January, February, and April, the employment-to-population ratio continues to rise, and the real unemployment rate (U-6) plunged from 9.4% in January to 8.6% in April. While businesses may have better expectation of what government will not do (e.g., adding a lot more red tape), they still want certainty about what government will do, such as tax, regulatory, and healthcare reform. Therefore, a pro-growth agenda is needed to keep the momentum.
Noteworthy
Nonfarm payroll job growth for February was revised up by 13,000 from +219,000 to +232,000 (final estimate). For March, it was revised down by 19,000 from +98,000 to +79,000 (second estimate). The May Employment Situation release is scheduled for Friday, June 2, at 8:30am.
[1] JEC considers the prime working-age LFPR, which measures the ratio of those aged 25 to 54 who are currently employed or have sought work in the past four weeks, a better indicator because demographic factors are affecting the overall LFPR.
[2] U-6 includes those actively seeking work in the last four weeks (the measure used in U-3), those who would like a job but do not believe any are available to them (discouraged workers), and those persons who want full-time work but can only find part-time work for economic reasons.
[3] These measurements consist only of gross wages and salary and do not account for non-monetary benefits and compensation. They are not adjusted for inflation. AWE accounts for the average number of hours worked while AHE does not. The U-3 rate is less meaningful than it used to be because the labor force participation rate has been low since the last recession.
[4] Production and nonsupervisory workers account for over 82% of all private-sector employees. For service-producing industries, this measure excludes supervisors and employees who are also owners. For the goods-producing sector, workers engaged in management, sales, and accounting are excluded.
