Employment picks up, but so does unemployment rate

Nonfarm payrolls rose 290,000 in April, while employment in the prior two months was upwardly revised by 121,000. Private payrolls increased 231,000 in April, much stronger than expected (Census hiring was only 66,000). Over the last three months, private payrolls have risen an average of 156,000 per month.

The unemployment rate rose to 9.9% in April from 9.7% in March as labor force participation increased to 65.2% from 64.9% (the labor force jumped 805,000). Household employment surged 550,000 in April and has risen an average of 374,000 per month over the last three months.

BOTTOM LINE: This is a strong report and much stronger than we were expecting. Since rebounding from the February storms, private payrolls have risen by over 400,000 and appear to be accelerating, while total payrolls have advanced by more than half a million. The household survey shows even greater strength with household employment increasing by 374,000 per month on average over the last three months. The only reason why the unemployment rate rose is because discouraged workers have started looking for jobs en masse and labor force participation is surging. Private job creation was the missing link of the recovery and it now appears to be coming on stream. While there is still plenty of slack in the labor market and we have no expectation of a Fed rate hike before March 2011, this pace of private job creation, if sustained, could set the stage for a softening of the extended period language over the summer.

Source RDQ

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