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Economy in Brief

U.S. Payrolls Firm
by Tom Moeller May 6, 2005

April non-farm payrolls rose 274,000 following an upwardly revised 146,000 increase a month earlier. Consensus expectations had been for a 175,000 rise. The latest increase pulled the average three month change in payrolls (240,000) to its highest in nearly a year.

The household survey also indicated that the labor market remained firm as the unemployment rate held at a low 5.2%. Employment rose 598,000 (1.8% y/y) and the labor force rose 605,000 (1.3% y/y) as the participation rate rose to 66.0%, its highest this year. The number of job losers fell sharply for the fourth straight month (-15.0% y/y) due to a 21.1% decline in the number of permanent job losers versus last year.

Private service producing payrolls rose 211,000 (2.0% y/y) last month and gains were spread across industries. Total government employment rose 18,000 (0.7% y/y) but federal government jobs fell again (-1.1% y/y). Factory sector payrolls fell 6,000 for the third monthly decline this year though the breadth of hiring gain improved slightly to 50%. Six-month breadth remained low at 38.7%.

Construction jobs rose a firm 47,000 (4.3% y/y).

The index of aggregate hours worked (employment times hours worked) rose 0.9% (3.1% y/y) helped higher by a jump in the length of the workweek to its highest since 2002. The level of hours worked began the quarter 4.4% (AR) ahead of 1Q05.

Average hourly earnings increased 0.3% for the second month and earnings in manufacturing recovered all of the prior month's 0.2% decline (2.3% y/y).

Evidence of Wage Inequality, Worker Education, and Technology from the Federal Reserve Bank of St. Louis is available here.

A corrected FOMC Statement is available here.

Employment April March Y/Y 2004 2003 2002
Payroll Employment 274,000 146,000 1.7% 1.1% -0.3% -1.1%
  Manufacturing -6,000 -7,000 -0.1% -1.2% -4.9% -7.2%
Average Weekly Hours 33.9 33.7 33.7 33.7 33.7 33.8
Average Hourly Earnings 0.3% 0.3% 2.7% 2.1% 2.7% 2.9%
Unemployment Rate 5.2% 5.2% 5.5% 5.5% 6.0% 5.8%
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