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Economy in Brief

U.S. Payrolls Declined For Fourth Straight Month, Unemployment Slipped
by Tom Moeller May 2, 2008

The Bureau of Labor Statistics reported that for the fourth consecutive month nonfarm payrolls fell. The 20,000 worker decline in April fell short of expectations for a decline of 78,000 and it followed a little revised 81,000 drop in March.

From the household sector survey, the unemployment rate slipped to 5.0% from the elevated 5.1% in March. Household employment recovered the declines during the prior two months and rose 362,000 (0.4% y/y). The labor force rose 173,000 (0.9% y/y). The labor force participation rate held steady at 66.0%, about the level of the last year while the number of persons who want a job rose slightly after two months of sharp decline.

The average duration of unemployment rose to 16.9 weeks from 16.2 in March. Those figures are down from the averages of the prior several years.

From the establishment survey, private nonfarm payrolls continued to indicate distress in the labor market. Private sector payrolls fell 29,000 last month, the fifth consecutive month of decline though it was less than the drops during the prior four months.

Factory sector jobs posted a 46,000 decline, which was about the same magnitude as declines during the prior three months. The three month rate of job loss of 4.0% was the fastest since 2003.

Construction sector employment declined 61,000 which was the largest decline since February '07. The three month growth rate deteriorated to -7.9%, its worst since 1991.

Hiring in the private service sector rose and the 81,000 increase recouped the negligible declines during the prior three months. Health care & education jobs were strongest on a one month basis. They rose 52,000 and the rate of increase has been steady near 3.0%. A 39,000 increase in professional & business services jobs accounted for much of the rest of last month's job gain but the three month change in these jobs was still a negative 0.7%. Temporary help services jobs, often a leading indicator of employment growth, fell 9,300 and the three month change fell to -10.7% (AR). Employment in finance rose 3,000 but it's still off 1.5% from the late 2006 peak. Real estate sector jobs fell 1,100 in April and were off 2.7% from the 2006 peak.

The one month diffusion index, which measures the breadth of job gain or loss (50 is the break even level), continued to indicate job loss and it stood at 45.4%. The three month index was even weaker at 42.9% which was near the lowest since 2003.

Average hourly earnings rose a negligible 0.1% after five consecutive months of 0.3% gain. Factory sector earnings fell 0.2% (+2.2% y/y) and that was the first monthly decline since 2004. Private service sector earnings rose 0.2% (3.7% y/y) after five consecutive months of 0.3% increase.

Today's announcement by the Federal Reserve that it, the European Central Bank and Swiss National Bank will expand liquidity measures can be found here.

Employment: 000s April March February Y/Y 2007 2006 2005
Payroll Employment -20 -81 -83 0.3% 1.1% 1.8% 1.7%
      Previous -- -80 -76 -- 1.3% 1.9% 1.7%
  Manufacturing -46 -48 -47 -2.3% -1.9% -0.5% -0.6%
  Construction -61 -46 -44 -5.0% -1.0% 4.9% 5.2%
Average Weekly Hours 33.7 33.8 33.7 33.8 (April '07) 33.8 33.9 33.8
Average Hourly Earnings 0.1 0.3% 0.3% 3.4% 4.0% 3.9% 2.7%
Unemployment Rate 5.0 5.1% 4.8% 4.6% (April '07) 4.6% 4.6% 5.1%
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