Today’s employment report shows an increase of 160,000 jobs, well under the Bloomberg Econoday consensus estimate of 200,000 jobs and below the entire consensus range of 175,000 to 245,000.
Revisions took April from 215,000 down to 208,000.
The household survey was far weaker than the payroll survey. Employment actually declined by 316,000, with fulltime employment down 196,000.
Let’s dive into the details in the BLS Employment Situation Summary, unofficially called the Jobs Report.
BLS Jobs Statistics at a Glance
- Nonfarm Payroll: +160,000 – Establishment Survey
- Employment: -316,000 – Household Survey
- Unemployment: -46,000 – Household Survey
- Involuntary Part-Time Work: -161,000 – Household Survey
- Voluntary Part-Time Work: +41,000 – Household Survey
- Baseline Unemployment Rate: +0.0 to 5.0% – Household Survey
- U-6 unemployment: -0.1 to 9.7% – Household Survey
- Civilian Non-institutional Population: +201,000
- Civilian Labor Force: -362,000 – Household Survey
- Not in Labor Force: +562,000 – Household Survey
- Participation Rate: -0.2 at 62.8 – Household Survey
Please consider the Bureau of Labor Statistics (BLS) Current Employment Report.
Total nonfarm payroll employment increased by 160,000 in April, and the unemployment rate was unchanged at 5.0 percent. Employment increased in professional and business services, health care, and financial activities. Job losses continued in mining.
Unemployment Rate – Seasonally Adjusted
Nonfarm Employment Change from Previous Month
Nonfarm Employment Change from Previous Month by Job Type
Hours and Wages
Average weekly hours of all private employees was flat at 34.4 hours. Average weekly hours of all private service-providing employees was flat at 33.3 hours. Average weekly hours of manufacturers was flat at 40.7 hours. for all three groups, average weekly hours is the same as a year ago.
Average hourly earnings of private workers rose $0.05 to $21.45. Average hourly earnings of private service-providing employees rose $0.04 to $21.24.
For discussion of income distribution, please see What’s “Really” Behind Gross Inequalities In Income Distribution?
Birth Death Model
Starting January 2014, I dropped the Birth/Death Model charts from this report. For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid. Should anything interesting arise in the Birth/Death numbers, I will add the charts back.
Table 15 BLS Alternate Measures of Unemployment
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
Notice I said “better” approximation not to be confused with “good” approximation.
The official unemployment rate is 5.0%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 9.7%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Some of those dropping out of the labor force retired because they wanted to retire. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.
Strength is Relative
It’s important to put the strength of some of the jobs numbers into proper perspective.
- In the household survey, if you work as little as 1 hour a week, even selling trinkets on EBay, you are considered employed.
- In the household survey, if you work three part-time jobs, 12 hours each, the BLS considers you a full-time employee.
- In the payroll survey, three part-time jobs count as three jobs. The BLS attempts to factor this in, but they do not weed out duplicate Social Security numbers. The potential for double-counting jobs in the payroll survey is large.
Household Survey vs. Payroll Survey
The payroll survey (sometimes called the establishment survey) is the headline jobs number, generally released the first Friday of every month. It is based on employer reporting.
The household survey is a phone survey conducted by the BLS. It measures unemployment and many other factors.
If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.
Looking for jobs on Monster does not count as “looking for a job”. You need an actual interview or send out a resume.
These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.
This report was much weaker than the headline number indicates.
+160,000 jobs vs. -316,000 employed is quite the discrepancy.
In the past, household survey weakness tended to be made up in subsequent months.
One of these times, out of the blue, we will see sustained weakness.
Mike “Mish” Shedlock
After a conversation with the BLS the number of full-time jobs lost is 253,000 not 196,000.
For details, please see Diving Into Seasonal Adjustments: Today’s Conversation With the BLS.
Rodrigo Furtado said:
That sudden sustained weakness will be right after the election.
A decade late and a trillion short said:
Only if somebody OTHER than media/Hollywood favorite Shillary wins. In that case, the gubbermint will resort to deporting unemployed persons to Jupiter in order to keep that headline number goin’ down. Unexpectedly!
Jobs? What do they have to do with it?
The goal has been reached. All that counts is a headline number of <5% unemployment.
Just ask Jimmy Carter about the disadvantages of that number reading 10% in an election year?
Nowhere near 10% in 1980. It got to 7.8% and averaged 6.9% over the year. But it has been >10% in the past as in 1932 and 1936 and the incumbents got reelected 1W 1L.
You will only see sustained weakness if the WH doesn’t like the way the election appears to be going…
The era of the Greatest Depression gets confirmed more and more with each passing day. When the numbers cannot be massaged any more, then you know it’s the beginning of the end.
Might it be the flat numbers are the result of massage, as a back pedaling way out for the Fed’s rate increase meme?
The Fed is political. It is in campaign mode, as well as survival mode.
Beware the statistics. Especially if you put money on them.
It sure looks like they “goal seek” the unemployment rate each month, using the civilian labor force as the variable.
Shadowstats.com tries to remove the distortions. He says unemployment is 23%. The last depression unemployment peaked at 25%. Obama can better that.
Tony Bennett said:
Not an exact science … but payroll taxes do not suggest strong employment/wage gains.
March 2015 (22 reporting days) $217.862 billion
March 2016 (23 reporting days) $216.675 billion
April 2015 (22 reporting days) $178.029 billion
April 2016 (21 reporting days) $182.351 billion
Steve Mcennery said:
Lies, damn lies and statistics. The millennials have never experienced full employment or have any idea as to how it feels to live in a healthy growing economy, this is as good as it gets for them. Conversely, the boomers have a memory of different times and know how much we are all being screwed, unfortunately you can’t buy experience but if the millennials ever wake up on mass, they are going to be really pissed.