According to the Bureau of Labor Statistics, the national unemployment rate dropped to 7.5% in April, a decrease of .1 percentage points over the previous month. The number of unemployed fell by 83,000 while the Labor Force grew by 210,000.
After slipping for several months, the Labor Force Participation Rate, which I have highlighted in previous jobs report analyses, held firm at 63.3. Whether or not this is just brief pause or the beginning of a turnaround remains to be seen. However, it is encouraging that the number of people ‘Not in the Labor Force’ dropped by 31,000 at the same time as a drop in the unemployment rate.
This means that the drop in unemployment is real, not just a shift of unemployed people out of the workforce. While one month’s worth of data does not a trend make, it is a good sign. It is important to note that a net 1.6 million people have dropped out of the labor force over the past year, so there is still a long way to go to return all of these people to the work force.
Turning to the Establishment Survey Data, 176,000 non-farm, private jobs were created. Sectors seeing the biggest gains were Retail Trade (+29.3k) Food Service (+37.9k) Healthcare (+19k) Temporary Help Services (+30.8k).
Seeing the largest losses were Federal (-8k), Information (-9k) and Nonresidential Specialty Trade Contractors (-11.1k) [Though Residential Specialty Trade Contractors and Residential Contractors were up a combined 13k, a good sign for the housing recovery]
The Atlanta Fed recently put out an unemployment calculator where you can calculate what the monthly job creation numbers would have to be to hit certain targets. For example, if you wanted to reach 5.5% unemployment and a Labor Force Participation Rate of 66%, which it was before the recession, it would take nearly 12 years to get there based on April’s job creation numbers of 179,000 per month.
Put another way, to get to 5.5% unemployment in 2 years, with a pre-recession labor force participation rate of 66%, the country would need to see job creation rates of an unheard of 475,000 a month.
(Click here to try the calculator yourself: http://www.frbatlanta.org/chcs/calculator/index.cfm)
While April’s data does offer encouraging signs of growth and reasons to be cautiously optimistic, it remains to be seen if this is a blip or the start of a growth trend. By mid-summer we should have an idea