April Unemployment Rate Plunges as 800,000 Leave the Workforce

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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 for April 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.

No real growth in hourly wages

(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 work week for all workers stayed at 34.5 hours; for manufacturing workers. the work week 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.

Healthy start for the 2nd quarter

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.”

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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.

Retail added nearly 35,000 jobs

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.
  • Health care plus 18,700;
  • Bars and restaurants plus 32,600;
  • Local government plus 17,000.

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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