08 May 2015

Decent, but Not Great Unemployment News

In April, non-farm payroll increased by 223,000and the (U-3) unemployment rate fel by 0.1% to 5.4%:
The American job market rebounded in April, the government said on Friday, helping to ease worries that the economy was on the brink of another extended slowdown after a bleak winter in which the overall economy stalled. But the growth in jobs failed to translate, once again, into any significant improvement in pay.

Employers added 223,000 positions last month, the Labor Department reported, and the unemployment rate decreased to 5.4 percent, a turnaround from the disappointing performance in March, initially reported as a modest 126,000 gain and then revised down on Friday to 85,000.

“We expected a rebound following the numbers in March and we got it, but not much more,” said Guy Berger, United States economist at RBS. “Wage growth is still the missing piece.”

Indeed, before Friday’s report, some economists were estimating that average hourly earnings might rise 0.2 percent or more in April, signaling an upswing from the slow pace of wage gains since the end of the recession.

But average hourly earnings rose only 0.1 percent in April, producing a 2.2 percent annual gain. That modest showing suggests that any meaningful wage gains for most workers are still delayed, despite the steadily falling unemployment rate.
 This really ain't much.

First, population increase requires about 200,000 new jobs each month to run in place, so 223,000 is not much, and second the drop in unemployment is largely an artifact of rounding:

In April, 8.549 million Americans were unemployed. The civilian labor force, which includes the employed and everyone looking for jobs, stood at 157.072 million. Based on those numbers, the unemployment rate was 5.443%.

In March, there were 8.575 million unemployed and 156.906 million in the labor force, which meant the unemployment rate back then was closer to 5.465%.

That's a 0.022% point decline in the unemployment rate. That's definitely less of a drop than the 0.1% drop rounding will get you.
On the brighter side, the Black unemployment rate fell tyo below 10% for the first time in 7 years.


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