Implications: Last month we said the labor market was clicking on almost all cylinders. Now it's shifting into higher gear. Including upward revisions to prior months, non-farm payrolls increased 290,000 in April, with all of the gain in the private sector. The increase in private payrolls was the largest since 2006. Total hours worked in the private sector increased 0.3% and are up 2.2% in the past year. Combined with increases in hourly pay, private sector wages and salaries – total cash earnings – are up 4.1% versus a year ago, more than enough to outpace inflation. In other words, workers have more purchasing power even if we exclude their fringe benefits. The negative part of today's report was the increase in the unemployment rate to 9% from 8.8% last month. We notice that the "true" increase was less than 0.2 percentage points. Unrounded, the rate was 8.83% in March and 8.96% in April, so the rise was really 0.13 points. The jobless rate comes from the household survey, an alternative measure of jobs that is usually better at picking up the self-employed and small start-up businesses. That survey showed a decline in civilian employment of 190,000 in April, which is inconsistent with other data on the economy. Also, in the past year, private sector payrolls are up an average of 143,000 per month while civilian employment is up only 83,000 per month. This is odd because civilian employment usually leads payrolls in the early stages of a recovery. As a result, we expect the household survey to show much stronger job creation in the next several months.
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Posted on Friday, May 6, 2011 @ 10:27 AM
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