Today's jobs report was unexpectedly strong-including after discounting Census jobs. And a rise in the unemployment rate actually points to optimism on the part of workers. Payroll jobs in April grew a healthy 290,000, following a revised 230,000 advance in March, and 39,000 rise in February. April's boost topped the market estimate for a 200,000 gain. Net combined revisions for March and February were up a 121,000-including turning February from negative to positive. But the key number is private payrolls as Census hiring added 66,000 to April's jobs, compared to adding 48,000 the prior month. Private nonfarm employment increased 231,000, following a 174,000 rise in March.
Payroll gains were widespread, including increases in goods-producing and service-providing sectors.
Goods-producing jobs increased 65,000 after a 55,000 rebound in March. Manufacturing employment surged 44,000, following a 19,000 advance in March. Construction jobs even continued a comeback with a 14,000 rise, after rebounding 26,000 in March. Mining jobs rose 7,000 in April.
Private service-providing employment gained 166,000 in April, following a 119,000 boost the month before. Latest strength was in professional & business services, up 80,000; leisure & hospitality, up 45,000; and education & health services, up 35,000.
On a year-ago basis, payroll jobs improved to minus 1.0 percent in April from minus 1.7 percent the month before.
Wage inflation is nonexistent currently but it is hard to tell initially if weakness is related to shifts in the composition of hiring or not but that likely partially explains the weakness. Average hourly earnings were flat in April, following a 0.1 percent dip in March. Analysts had expected a 0.2 percent boost.
Not only is hiring improving but the workweek. The average workweek for all workers firmed to 34.1 hours from 34.0 hours in March. The consensus had projected 34.0 hours. The traditional series for production and nonsupervisory workers improved to 33.4 hours in April from 33.3 the prior month.
From the household survey, the unemployment rate rose to 9.9 percent from 9.7 percent in March, coming in above the consensus estimate for 9.6 percent. But the jump was due to an 805,000 surge in the labor force. April household employment actually jumped 550,000. Basically, discouraged workers see hope of employment and have jumped back into the labor force.
The bottom line is that the U.S. labor market is showing notable improvement. This could help the consumer sector regain optimism and strengthen the overall recovery. Equity futures rose on the news.
Market Consensus before announcement
Nonfarm payroll employment in March rebounded 162,000, following a 14,000 decline in February and rise of 14,000 for January. The March increase was the largest for payrolls since the March 2007 boost of 239,000. The big negative in the March report was for average hourly earnings. Wage inflation in March fell to a 0.1 percent decline from a 0.2 percent gain the month before. The dip in wages probably was due to a shift in the composition to lower paid workers. A good sign for workers is that the workweek is improving-which is a leading indicator for future hiring. The average workweek (traditional series for production and nonsupervisory workers) rose to 33.3 hours in March from 33.1 the previous month. For all workers, the average workweek edged up to 34.0 hours from 33.9 hours in February. Nonetheless, improvement in unemployment is slow coming as the unemployment rate was unchanged at 9.7 percent in March.