April Job Growth Comes In Far Below Expectations

May 6, 2016

Leading indicators April 2016Employers slowed their hiring in April, adding a seasonally adjusted 160,000 new non-farm jobs, the smallest increase since September. Economists had been expecting a much larger gain of about 200,000 jobs.

The monthly Labor Department report released this morning also put the unemployment rate at 5%, unchanged from March, and not much different from where it’s been since the fall. In addition, the Labor Department adjusted downward its job counts for February and March, reducing them by 19,000.

Monthly job growth this year is averaging 192,000. For the same four months last year, the monthly average was 158,000, but that included two months where severe winter weather sharply curtailed hiring. For the full year, the 2015 average was 213,000.

The comparatively anemic April results were foreshadowed Wednesday, when ADP’s monthly employment report said there were 156,000 new private sector jobs in the month.

Another indicator, the monthly count from The Conference Board of job openings posted online on job boards and company career sites, has been showing declines in four of the last five months. (The April count was up by 39,600.) Since November, the number of jobs posted online is down by 510,000.

How much should be read into this is unclear, particularly since public postings of openings are only part (a big part, to be sure) of the overall hiring picture. However, The Conference Board’s job count hasn’t had four consecutive down months since the recession years of 2008 and 2009.

Meanwhile, the government reported that private sector earnings were up 8 cents an hour in April to $25.53. Over the year, average hourly earnings have risen by 2.5%. Economists have been predicting that employers would raise wages as the unemployment rate dropped. For most of the last several years, pay has grown by 2% or less annually.

Though the unemployment rate seems to have leveled off, another indicator of labor supply, the number of Americans participating in the labor force, is near its 40 year low. In April, the rate fell to 62.8% from 63% in March. It had been climbing since bottoming out last September.

Besides the 7.9 million officially counted as unemployed, another 6 million are working part time because they can’t find other work and 1.7 million more want to work, but have given up looking.

The Labor Department’s report shows April’s numbers would have been somewhat better were it not for the loss of 11,000 government jobs, including 9,000 federal positions. On a seasonally adjusted basis, private sector employers added 171,000 non-farm jobs.

The biggest gains came in healthcare, which saw 44,200 new positions. Hospitals accounted for 22,900. The hospitality sector also had strong job growth, adding 22,000 with most of them in bars and restaurants.

The financial activities sector added 20,000 jobs. Temp agencies hiring increased by 15,000.

Professional and technical services added 31,100 jobs. Computer systems accounted for 7,300 of those jobs, but a surprising spurt in hiring for management and technical consulting services added 20,600.