| Employment Situation |
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Released On 5/4/2012 8:30:00 AM For Apr, 2012
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Prior | Prior Revised | Consensus | Consensus Range | Actual |
| Nonfarm Payrolls - M/M change | 120,000 | 154,000 | 165,000 | 105,000 to 244,000 | 115,000 | | Unemployment Rate - Level | 8.2 % | | 8.2 % | 8.1 % to 8.3 % | 8.1 % | | Average Hourly Earnings - M/M change | 0.2 % | | 0.2 % | 0.1 % to 0.3 % | 0.0 % | | Av Workweek - All Employees | 34.5 hrs | | 34.5 hrs | 34.5 hrs to 34.6 hrs | 34.5 hrs | | Private Payrolls - M/M change | 121,000 | 166,000 | 178,000 | 105,000 to 246,000 | 130,000 |
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Highlights
April jobs were softer than expected but there were upward revisions and the unemployment rate dipped to 8.1 percent from 8.2 percent in March. Seasonality issues apparently are still at play. Payroll jobs in April increased only 115,000, following increases of 154,000 in March (originally 120,000) and 259,000 in February (prior estimate up 240,000). The net revisions for February and March were up 53,000. Analysts expected a 165,000 increase for April.
Private payrolls rose 130,000 in April after a 166,000 increase the prior month. The consensus forecast was for a 178,000 advance.
Goods-producing industry employment rose 14,000 after a 38,000 boost in March. For the latest month, manufacturing increased 16,000; construction dipped 2,000; and mining edged up 1,000.
Private service-providing industry employment rose 116,000, following a 128,000 gain in March. The notable positive was a 62,000 increase in professional & business services. Retail trade rose 29,000 while health care gained 19,000 and leisure & hospitality increased 12,000.
The public sector continued to downsize with a 15,000 drop in government employment, led by a 10,700 decline in local government education.
Average hourly earnings were flat, following a 0.2 percent gain in March. Analysts expected a 0.2 percent gain. The average workweek for all workers in April was steady at 34.5 hours. Expectations were for 34.5 hours for April.
From the household survey the dip in the unemployment rate to 8.1 percent reflected a 342,000 decline in the labor force. Household employment fell 169,000. The median market forecast for the unemployment rate was for 8.2 percent in April.
On the news, equity futures were little changed. The bottom line is that the labor market was a little stronger in February and March than earlier believed but softer in April. The dip in the unemployment rate is for the wrong reason and there could be reversal if more return to active job searches. While disappointing for April, net the report was about as expected with revisions. Analysts and economists will continue to debate how much of April's sluggishness was merely the outcome of atypical warm winter months moving forward job gains.
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Market Consensus before announcement
Nonfarm payroll employment in March advanced a modest 120,000, following increases of 240,000 in February and 275,000 in January. The March jobs report was clearly disappointing though the unemployment rate dipped to 8.2 percent from 8.3 percent in February. Private payrolls were barely stronger than overall, rising 121,000 in March after a 233,000 increase the prior month. Average hourly earnings rose 0.2 percent, following a 0.3 percent gain in February. The average workweek for all workers in March slipped to 34.5 hours from 34.6 in February. Analysts projected 34.5 hours for March.
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Definition
The employment situation is a set of labor market indicators based on two separate surveys in this one report. Based on the Household Survey, the unemployment rate measures the number of unemployed as a percentage of the labor force. Other key series come from the Establishment Survey (of business establishments). Nonfarm payroll employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The average workweek reflects the number of hours worked in the nonfarm sector. Average hourly earnings reveal the basic hourly rate for major industries as indicated in nonfarm payrolls.
Why Investors Care
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![[Chart]](showimage.asp?imageid=22472)
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During the mature phase of an economic expansion, monthly payrolls gains of 150,000 or so are considered relatively healthy. In the early stages of recovery though, gains are expected to surpass 250,000 per month.
Data Source: Haver Analytics
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![[Chart]](showimage.asp?imageid=22473)
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The civilian unemployment rate is a lagging indicator of economic activity. During a recession, many people leave the labor force entirely, so the jobless rate may not increase as much as expected.
This means that the jobless rate may continue to increase in the early stages of recovery because more people are returning to the labor force as they believe they will be able to find work. The civilian unemployment rate tends towards greater stability than payroll employment on a monthly basis. It reveals the degree to which labor resources are utilized in the economy.
Data Source: Haver Analytics
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