Job Growth Continues to Disappoint
Another month, we get another weak jobs report. The Employment Situation Report, released on the first Friday of every month by the Bureau of Labor Statistics (BLS), revealed just 160K net Non-farm Payroll jobs were created in the month of April, well below market expectations of 200K.
The U3 Unemployment Rate, the official and narrowest measure of unemployment was 5%. The broadest measure of unemployment, the U6 rate, showed unemployment at 9.7%. Both as expected. Average weekly hours worked held steady at 34.5 hours, also as expected.
Other closely watched measures from the monthly report also showed more of the same. The Employment Population Ratio and the Labor Force Participation Rate both fell a bit more in April to 59.7% and 62.8% respectively.
Average Monthly Non-Farm Payrolls 1976- 2015
The sectors with largest job growth in April included health care and social assistance, temporary help services, leisure and hospitality, and professional business services. Sectors with net job losses included mining and logging, nondurable goods, and retail trade.
As can be seen in the chart above this continues a long-term trend of weakening net job creation. In 2015 average monthly non-farm payrolls was an anemic 200K.
Expectations for an interest rate hike in June by the Federal Reserve (Fed) will be diminished by this number as the Fed has stated clearly they are data dependent. They will get the May Non-farm Payroll data before their June meeting. Anything below 200K for May will keep the Fed on hold in June.
Is the Fed one and done? Was the December 2015 rate hike it? It ought not to be. The Fed must normalize interests rates as quickly as possible and remove the moral hazard of ZIRP and take off the table once and for all NIRP.
April is another month we see low job growth, low wage growth, growing part-time work, displacement of native born workers by foreign born workers, and lower quality jobs accounting for most of the growth.
The birth/death adjustment in April was plus 244K.