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Economy in Brief

U.S. Job Market Strength Continues in April
by Tom Moeller  May 6, 2022

• Employment gains stabilize m/m, but remain robust overall.

• Hourly earnings growth stays strong y/y.

• Jobless rate steadies near 50-year low.

Nonfarm payroll employment increased 428,000 (4.6% y/y) during April, the same as in March which was revised from 431,000. A 390,000 April gain had been expected in the Action Economics Forecast Survey. The 714,000 February increase was revised from 750,000.

Wage growth continues to trek higher. Average hourly earnings rose 0.3% in April versus an expected 0.4% rise. The 5.5% y/y gain in April is up significantly from the 4.2% gain registered for all of 2021.

The unemployment rate held steady during April at a low 3.6%. A dip to 3.5% had been expected. Employment in the household survey declined 353,000 last month after rising 736,000 in March. The labor force fell by 363,000 workers after increasing 418,000 in March. The overall unemployment rate, including those who were marginally attached or working part-time for economic reasons, edged higher to 7.0% from 6.9% in March.

Last month's gain in payroll employment continued to be led by the private service sector where jobs increased 340,000 (5.5% y/y) following a 357,000 March rise. Trade, transportation & utilities employment rose 104,000 (4.5% y/y) as retail trade employment growth slowed sharply to 29,200 (3.8% y/y), a fraction of what it was early last year. Growth in leisure & hospitality sector jobs eased last month, slowing to 78,000 (14.1% y/y), the weakest since December 2020. Education & health services employment growth remained moderate at 59,000 (2.6% y/y). Employment in the professional & business sector weakened sharply to 41,000 (5.7% y/y) as temporary help rose just 2,400 (12.7% y/y). The number of financial sector workers rose an improved 35,000 (2.2% y/y) and information services jobs gained 12,000 (5.9% y/y). Government sector payrolls rose an improved 22,000 (1.2% y/y) in April but federal government jobs fell 6,000 (-1.0% y/y).

Factory sector employment remained strong last month, rising 55,000 (4.1% y/y) and doubling the January gain. Construction sector payrolls grew just 2,000 (3.2% y/y) in contrast to a 54,000 February rise.

Increased competition to fill job slots has fostered strength in workers' pay. The 0.3% rise in average hourly earnings last month was paced by the leisure & hospitality sector where earnings strengthened 0.6% (11.0% y/y). A 0.6% increase (5.5% y/y) in construction sector earnings came along with factory workers who also were paid 0.6% more m/m and 5.0% more y/y. Professional & business sector earnings rose 0.5% (6.7% y/y) while financial sector earnings rose 0.4% (3.5% y/y). Realizing a more modest pay increase m/m was the education & health service sector where earnings rose 0.2% (5.6% y/y).

The length of the private sector average workweek held steady last month at 34.6 hours. It has fallen steadily from its 35.0 peak in January 2021. Construction sector hours dipped to 38.8 hours from 39.5 two months earlier and private service sector hours steadied at 33.6. Manufacturing sector hours eased to 40.5 from 40.7 in the prior two months. Conversely, factory sector overtime hours held steady at 3.4 hours, up from 3.1 hours just before the recession.

What had been a steady flow of new entrants to the labor force took a breather last month. From the household employment survey, the steady 3.6% unemployment rate in April reflected a slip in the labor force participation rate to 62.2% last month, down from its two year high of 62.4% reached in March. Nevertheless, its post-recession uptrend from 61.5% remained in place.

The employment/population ratio for all workers eased to 60.0% in April from 60.1% in March. It remained well above its 51.3% low in April 2020. In February 2020, the ratio reached a high of 61.2%.

The average duration of unemployment rose to 25.0 weeks in April from 24.2 weeks in March, but that remained down from the high of 31.6 weeks in June of last year. The median unemployment duration held steady at 7.5 weeks, remaining below a recent high of 19.6 weeks in June of last year.

The employment & earnings data are collected from surveys taken each month during the week containing the 12th of the month. The labor market data are contained in Haver's USECON database. Detailed figures are in the EMPL and LABOR databases. The expectations figures are in the AS1REPNA database.

Employment (SA, M/M Change, 000s) Apr Mar Feb Apr Y/Y 2021 2020 2019
Payroll Employment 428 428 714 4.6% 2.8% -5.8% 1.3%
 Previous Estimate -- 431 750 -- -- -- --
  Manufacturing 55 43 50 4.1 1.5 -5.1 1.0
  Construction 2 20 54 3.2 2.2 -3.2 2.8
  Private Service-Producing 340 357 590 5.5 3.6 -6.6 1.4
  Government 22 4 10 1.2 0.1 -2.8 0.7
Average Weekly Hours - Private Sector 34.6 34.6 34.7 34.9 34.8 34.6 34.4
Private Sector Average Hourly Earnings (%) 0.3 0.5 0.1 5.5 4.2 4.9 3.3
Unemployment Rate (%) 3.6 3.6 3.8 6.0 5.4 8.1 3.7
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