Jobs data

The BLS said a net 266k jobs were created in April, quite different than the expectations of a 1mm plus and the two prior months were revised down by 78k. The private sector added just 218k. The household survey said a net 328k jobs were gained and when compared to the rise in the labor force of 430k, the unemployment rate rose to 6.1% from 6%. Positively though, the U6 all in rate fell to 10.4% from 10.7% and that is the lowest since March 2020.

Offsetting somewhat the big disappointment was the increase in hours worked to 35 from 34.9 which matches the most since at least 2006 that I have data on. Also, the participation rate ticked up by 2 bps to 61.7%, matching the highest since March 2020. The employment to population ratio rose to 57.9% from 57.8%, higher for the 4th straight month. Average hourly earnings rose .7% m/o/m, well above the estimate of no change and comes after a one tenth drop in March. Combine this with the hours worked and average weekly earnings rose by 1% m/o/m, the most in years.

We see and hear many stories about the lack of labor supply (or willing labor supply) and the Pool Available Labor fell for the 4th straight month to the lowest since March but also of course because more people are taking jobs too.

With auto factories selectively shutting down auto production in response to the lack of semi’s, I’ll argue that it helps to explain the decline of 18k manufacturing workers, well worse than the estimate of +54k. There was no net hiring in construction notwithstanding new construction that is on fire but if builders can’t get lumber, nor workers, maybe that explains this.

I can’t explain the 15k person decline in retail with more things reopening, nor the drop in trade and transport workers when employers can’t find enough. Temp help dropped a sharp 111k and also is to blame for the headline jobs miss. The positive was the 331k person hiring of leisure and hospitality workers vs 206k in March and 413k in February.

Well, we have quite the difference between what ADP said on Wednesday with its private sector job gain of 742k and the 218k today in the BLS private sector figure. What we are seeing in the early stage of this economic recovery is late stage behavior in that we are running too hot in terms of the supply side being able to meet the demand and that in itself is slowing economic activity in certain parts of the economy. I firmly believe a large part of this jobs miss is in part due to the clogged up supply chains and difficulty in filling opening jobs. This is NOT a demand issue, it is clearly a labor supply problem I believe.