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Economy in Brief

U.S. Non-farm Payroll Growth in Gear
by Tom Moeller May 7, 2004

Non-farm payroll growth in April of 288,000 surpassed Consensus expectations for a 175,000 rise. It was accompanied by upward revisions to payroll gains in both the prior two months. Since payrolls began rising last September the monthly increase has averaged 139,000 and payrolls have risen 0.9%.

The one-month diffusion index for private non-farm payrolls slipped to 61.7% from an upwardly revised March reading of 64.0. This breadth-of-change measure has had an 86% correlation with the monthly change in employment over the last ten years. Readings above 50 are consistent with positive growth in payrolls.

Manufacturing sector payrolls grew 21,000 following upwardly revised figures for the prior two months. The last three months have been the best for factory sector hiring since late 1998. Gains were scattered across industries. The one-month diffusion index for manufacturing payrolls improved to 55.4% from an upwardly revised 51.9% in March.

Service producing payrolls jumped 246,000 (1.0% y/y). The gain was led by a 123,000 (3.0% y/y) rise in the professional & business services category including a 35,300 (12.1% y/y) rise in temporary help services.

Government sector jobs rose 8,000 (-0.1% y/y) but construction jobs were strong again, up 18,000 (2.8% y/y).

The index of aggregate hours worked (employment times hours worked) rose 0.3% and began 2Q 0.3% ahead of the 1Q average.

Average hourly earnings rose 0.3% (2.2% y/y) with a notable 0.4% (2.8% y/y) gain in factory sector earnings. Earnings in the financial as well as the information sectors also were strong.

From the separate household survey the unemployment rate fell to an expected 5.6%. Employment surged 278,000 (0.7% y/y) and the labor force rose 91,000 (+0.2% y/y). The labor force participation rate was unchanged for the third month at 65.9% versus 67.1% averaged from 1997-2000.

"Economic Policy Implications of World Demographic Change" from the Federal Reserve Bank of Kansas City can be found here.

Employment April Mar Y/Y 2003 2002 2001
Payroll Employment 288,000 337,000 0.8% -0.3% -1.1% 0.0%
  Manufacturing 21,000 9,000 -1.9% -4.8% -7.2% -4.8%
Average Weekly Hours 33.7 33.7 33.6 33.7 33.8 34.0
Average Hourly Earnings 0.3% 0.1% 2.2% 2.7% 2.9% 3.8%
Unemployment Rate 5.6% 5.7% 6.0% 6.0% 5.8% 4.8%
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