U.S. Labor Market Rebounds in April

The U.S. Labor Market Report covering the national employment situation in April showed a rebound in employment growth with a gain of 223,000 jobs. The unemployment rate fell to 5.4%, the lowest since May 2008. Average hourly earnings increased by $0.03 in April to $24.87. Over the year, average hourly earnings were up by 2.2%, showing little upward momentum but outpacing inflation.

The employer payroll survey reported that total nonfarm employment in the United States increased by 223,000 jobs in April, returning to trend growth after an extremely weak showing in March. Accompanying last month’s job gain were revisions to the February figure (revised up from 264,000 jobs to 266,000) and the March number, which was revised down from a gain of 126,000 jobs to just 85,000. With these revisions, the gains in February and March combined were 39,000 lower than previously reported. Over the past three months, job gains have averaged 191,000 per month.

On a year-to-year (YTY) basis, U.S. employment expanded by nearly 3.0 million jobs, an increase of 2.2%. Every major industry sector added jobs over the year and over the month with the exception of mining and logging. The fastest growing sectors in YTY percentage terms were construction (4.6% or 280,000 jobs); professional and business services (3.5%, 654,000 jobs); and leisure and hospitality (3.0%, 434,000 jobs). Reaching new employment peaks were trade, transportation and utilities; professional and business services; education and health care; leisure and hospitality; and other services.

The unemployment rate ticked down to 5.4%; the year ago rate was 6.2%. The April unemployment rate was also well below the average rate (since 1990) of 6.1%. According to data from the Federal Reserve, the unemployment rate that would signal full employment currently stands at 5.16%. Last month, 166,000 individuals entered the labor force bringing the labor force participation rate up to 62.8%, up from 62.7% in March and the same as a year ago.

Other labor market indicators in the April report showed improvement as well. The more comprehensive U-6 unemployment rate, which counts part-time workers who would prefer full-time work and persons who would like to work but have given up looking for a job, fell to 10.8% from 12.3% a year ago.

Also encouraging, individuals out of work are spending less time on the unemployment rolls. The median duration of unemployment in April fell to 11.7 weeks from 15.6 weeks a year ago. Improvements in the labor market have also helped bring down the share of workers who have been jobless for 27 weeks or more. In April, that share was 29.0% versus 35.1% in April 2014. During the recession, the share of long-term unemployed climbed past 45%. Over the past year, the number of long-term unemployed persons (not counting individuals who have given up looking for work) has fallen by 888,000. The share of full-time workers relative to part-time workers is also approaching normal levels, coming in at 81.3%. The long-run figure is 82.0%.

Summary: The weakness in the labor markets demonstrated in March appears to have been transitory. The pace of job growth picked up in April and with continued job creation and more people entering the labor force, the unemployment rate fell to 5.4%, the lowest since May 2008. Industries that have been the biggest source of job gains locally (transportation and warehousing, motion picture and sound recording) continued to trend upward nationally in April. The biggest area of concern is currently the slow rate of wage growth, but as the labor markets continue to tighten through the balance of 2015, the pace of wage growth is expected to pick up.

Source:  http://www.bls.gov/news.release/pdf/empsit.pdf