Jobs data

Payrolls in April grew by 428k, 58k more than expected but mostly offset by a downward revision to the two prior months of 39k. So call it a touch above the estimate. The household survey though said there was a loss of 353k jobs and combined with the decline in the size of the labor force of 363k, thus a similar amount, the unemployment rate held at 3.6% but not for the right reasons. The estimate was 3.5%. The all in U6 unemployment rate ticked up by one tenth to 7%.

The participation rate rose two tenths to 62.2% but the employment to population ratio was down one tenth to 60.0%. The participation rate for the important 25-54 yr cohort was 82.4% vs 82.5% last month and vs 83.1% in January 2020. Hours worked held at 34.6 but the estimate was 34.7. Average hourly earnings rose .3% m/o/m after a .5% rise in March. Taken together, it was as expected (April one tenth light, March revised up by one tenth). Versus last year, hourly earnings were up 5.5% after a 5.6% increase in March. Compare that to next week’s expected CPI of about 8%. Combining hours and hourly wages puts average weekly earnings up .3% m/o/m and 4.6% y/o/y vs 4.7% in March and 5.5% in February. Leisure and hospitality is seeing some of the best wage growth with hourly earnings up .6% m/o/m and 8.4% y/o/y.

Job leavers as a % of the unemployed was 13.1% vs 13% in the month before. It peaked in this cycle in February at 15.1%.

We know the strains on transportation and the need for more help, and that sector, including warehouse, saw a job jump to 52k from 10k in March but it rose by 74k in February. Manufacturing added 55k vs 43k in March. Construction saw almost no job growth, up 2k but we don’t know how much was due to demand and how much because of supply issues. The leisure/hospitality sector added 78k vs 100k in March and 124k in February.

Bottom line, the data was about as expected with still another good gain in jobs. Wages are growing but still not keeping up with inflation. This said, this data lags and we thus have to look ahead and the signs are very mixed. On one hand we hear the demand for labor remains strong in some sectors but in others I’m hearing companies are trying to limit hiring’s because their labor bill with existing employees keeps rising rapidly. And with end demand reflecting mixed signals, we’d think that would impact hiring decisions from here. Muddy is thus the outlook.