Analysts See Signs of Recovery in Jobs Report
What is your reaction to the latest U.S. unemployment numbers?
Chief economist, Moody’s Analytics
Non-farm payrolls increased a surprising 290,000 in April, with slight upward revisions to February and March. Moreover, the gains were broad-based, with manufacturing adding more than 40,000 jobs, its strongest gains since 1998. Census hiring added less than 100,000, which means that more of these job gains were real than imaginary.
We saw an even greater surge in job growth in the household survey — 500,000 — which more accurately includes the self-employed and small businesses. Those gains were not enough, however, to stem a rise in the unemployment rate from 9.7 percent to 9.9 percent. The silver lining is that the rise in the unemployment rate rose because more discouraged workers got hopeful as hiring picked up and rejoined the labor force.
Finally, hours worked picked up but wages continued to stagnant. This reflects the ongoing slack in the economy, and how far we really are from feeling good again.
The Bottom Line: Labor market conditions are improving, but at a slower pace than anyone would like, given the depth of the declines that we endured. This is better than the alternative — a further contraction — which is not off the table given the recent turmoil in Greece and turbulence in financial markets. We do, however, seem to be seeing at least a glimmer of light in what has been a very long tunnel.
Chief economist, Moody’s Analytics
It feels like a light switch went back on in many businesses this spring. The job gains in March and April were strong and broad-based across industries. Job growth in manufacturing and construction is particularly encouraging as these industries have been the most serious drags on the job market.
The leading indicators of future job growth, including higher hours worked per week and increasing temporary jobs, also point to a further strengthening in the job market in coming months. Businesses ask their existing workforce to work longer hours and they hire more temps before adding more full-timers. Surging corporate profits and improving corporate balance sheets have finally convinced businesses to resume expanding their operations. The economic recovery is gaining traction.
The increase in unemployment back close to 10 percent does highlight that the job market and economy remain very fragile. Millions of people stepped out of the labor force during the recession and are now beginning to look for work again, thinking that there is a better chance of finding a good job. With so many unemployed and underemployed, wages remain under intense pressure. The economy is thus still very vulnerable to shocks like the Greek debt crisis, which could easily undermine confidence.
Until unemployment is headed definitively lower, which I don’t think will occur until very late this year or early next, the Federal Reserve and fiscal policymakers will need to remain aggressive in providing support to the economy. There would be no good policy response if the economy were to slip back into recession for whatever reason.
Vice president and co-director of the economic studies program at the Brookings Institution
The April employment report is the best we have seen since the recession started more than two years ago. Payrolls expanded by 290,000 jobs in April, marking the fourth monthly gain in a row. In total, we have seen an increase of close to 600,000 jobs since the end of last year.
The most positive news in the report was that a large share of job growth was outside of the government sector — an essential ingredient for a sustainable recovery. Temporary hiring for the 2010 Census added more than 60,000 jobs, but the private sector added about 230,000 jobs. And within the private sector, we are seeing broad-based gains, with payrolls in manufacturing, professional and business services, health care, and in leisure and hospitality all showing sizable increases.
Despite the improvement last month, we need to be mindful that the labor market remains very weak. We have only made up a small share of the more than 8 million jobs that were lost to the recession, not to mention the jobs that we would have created for our growing population had the economy not fallen into recession. And the unemployment rate remains stubbornly high, moving up to 9.9 percent in April from 9.7 percent in March. The increase reflects more people looking for jobs now, and only time will tell whether this development is a positive sign — reflecting more optimism about the prospects for being hired — or whether it is a reflection of the extreme financial strains that many American families continue to feel.
Economic and business consultant, Conerly Consulting
The economy is on the mend. We have a long way to go before employment is back to normal, but the evidence shows progress. The production-based indicators, such as gross domestic product and industrial production have clearly bounced back. We’re probably just one quarter away from reaching our old peak level of real GDP. The employment-based indicators have been slower to rebound, but now show gains. Total non-farm employment (the standard measure) has grown in each of the last four months, with strong gains the last two months. Although Census workers inflated the increases, even without them the gains are substantial.
Manufacturing, an important bellwether, has added workers in the last four months. Temporary help agency employment has also expanded, which is often a leading indicator for the entire economy.
The rise of the unemployment rate is even a positive sign. The number of employed people rose, but the number of people looking for work increased even more. To be counted toward the unemployment rate, a jobless person must have been looking for work in the past four weeks. Otherwise, that jobless person is considered “not in the labor force.” The increase in the number of people looking for work is a sign that the jobless are less discouraged about job prospects than they had been a few months ago.