Jobs +263,000 vs. Employment -103,000: Unemployment Rate 3.6% Lowest Since 1969

-edited

Jobs rose by a whopping 263,000 but the discrepancy between the jobs survey and the household survey widens.

Initial Reaction

Last month, the BLS stated job gains were 196,0000 while employment fell by 201,000. The wild fluctuations continue this month as the discrepancy between the two surveys widened further.

The unemployemnt rate is down as people are dropping out of the labor force like mad.

Last month, the labor force fell by 224,000. This month, the labor force shed another 490,000. Last month, those not in the labor force rose by 369,000. This month, the number is 646,000.

Job Revisions

The change in total nonfarm payroll employment for February was revised up from +33,000 to +56,000, and the change for March was revised down from +196,000 to +189,000. With these revisions, employment gains in February and March combined were 16,000 more than previously reported.

BLS Jobs Statistics at a Glance

  • Nonfarm Payroll: +263,000 – Establishment Survey
  • Employment: -103,000 – Household Survey
  • Unemployment: -387,000 – Household Survey
  • Involuntary Part-Time Work: +155,000 – Household Survey
  • Voluntary Part-Time Work: +25,000 – Household Survey
  • Baseline Unemployment Rate: 3.6% – Household Survey
  • U-6 unemployment: Unchanged at 7.3% – Household Survey
  • Civilian Non-institutional Population: +156,000
  • Civilian Labor Force: -490,000 – Household Survey
  • Not in Labor Force: +646,000 – Household Survey
  • Participation Rate: -0.2 to 62.8% – Household Survey

Employment Report Statement

Total nonfarm payroll employment increased by 263,000 in April, and the unemployment rate declined to 3.6 percent. Notable job gains occurred in professional and business services, construction, health care, and social assistance.

Unemployment Rate – Seasonally Adjusted

The above Unemployment Rate Chart is from the BLS. Click on the link for an interactive chart.

Nonfarm Employment Change from Previous Month​ ​

Hours and Wages

Average weekly hours of all private employees fell 0.1 hour to 34.4 hours. Average weekly hours of all private service-providing employees was flat at 33.3 hours. Average weekly hours of manufacturers was flat at 40.7 hours.

Average Hourly Earnings of All Nonfarm Workers rose $0.06 to $27.77. That a 0.22% gain. Average hourly earnings of private service-providing employees rose $0.06 to $27.53, a gain of 0.22%. Average hourly earnings of manufacturers rose $0.02 to $27.47, a gain of 0.07%.

Average hourly earnings of Production and Supervisory Workers rose $0.07 to $23.31. That's a 0.30% gain. Average hourly earnings of private service-providing employees rose $0.07 to $23.03, a gain of 0.30%. Average hourly earnings of manufacturers rose $0.03 to $21.97, a gain of 0.14%

Year-Over-Year Wage Growth

  • All Private Nonfarm from $26.90 to $27.77, a gain of 3.2%
  • All production and supervisory from $22.55 to $23.31, a gain of 3.4%.

For a discussion of income distribution, please see What’s “Really” Behind Gross Inequalities In Income Distribution?

Birth Death Model

Starting January 2014, I dropped the Birth/Death Model charts from this report. For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid. Should anything interesting arise in the Birth/Death numbers, I will comment further.

Table 15 BLS Alternative Measures of Unemployment

Table A-15 is where one can find a better approximation of what the unemployment rate really is.

Notice I said “better” approximation not to be confused with “good” approximation.

The official unemployment rate is 3.6%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 7.3%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Some of those dropping out of the labor force retired because they wanted to retire. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.

Strength is Relative

It’s important to put the jobs numbers into proper perspective.

  1. In the household survey, if you work as little as 1 hour a week, even selling trinkets on eBay, you are considered employed.
  2. In the household survey, if you work three part-time jobs, 12 hours each, the BLS considers you a full-time employee.
  3. In the payroll survey, three part-time jobs count as three jobs. The BLS attempts to factor this in, but they do not weed out duplicate Social Security numbers. The potential for double-counting jobs in the payroll survey is large.

Household Survey vs. Payroll Survey

The payroll survey (sometimes called the establishment survey) is the headline jobs number, generally released the first Friday of every month. It is based on employer reporting.

The household survey is a phone survey conducted by the BLS. It measures unemployment and many other factors.

If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.

Looking for jobs on Monster does not count as “looking for a job”. You need an actual interview or send out a resume.

These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.

Final Thoughts

The past several jobs reports have had wild fluctuations. This month the discrepancies strengthen.

Last month I commented: "For the last three months, jobs are up an average of 180,000 per month. Employment is up 54,000 per month."

In February, employment was 156,949. In April, employment was 156,645. That's a three month loss of 304,000 employees, 101,000 a month.

Last month I commented "Year-over-year employment went from 155,160 to 156,748. That's an average of 132,000 per month and slowing, if the trend holds."

In April, year-over-year employment rose from 155,216 to 156,645. That's an average gain of 119,000. The trend continues.

Jobs reports in 2019 have been much weaker than the headline numbers suggest. One set of numbers is wrong.

Mike “Mish” Shedlock

Comments (31)
No. 1-14
Ted R
Ted R

Does anyone believe anything the BLS says?

Six000mileyear
Six000mileyear

The chart of unemployment is entering a bottoming stage since it is well past the greatest rate of change which occurred between 2013 and 2015.

Casual_Observer
Casual_Observer

The NILF number will continue to rise. Companies are barely even hiring anyone that is currently unemployed. The BLS data doesnt take into account when someone leaves one job for another. This is not a net job gain.

Sechel
Sechel

people leaving the work force is what I mostly got out of it. Wondering what construction job growth we're seeing since home construction is not that robust.

Zaur
Zaur

How can number of payrolls increase if the total number of employed have decreased?

mark0f0
mark0f0

Multiple jobs. Which is consistent with a reasonably robust "waiters and bartenders" economy, but completely inconsistent with what we should be seeing -- vibrance in full-time employment.

The STEM sector, for instance, should be crazy hot at this point, with alleged unemployment low, yet its comatose.

Blurtman
Blurtman

What a bunch of Debbie Downers. Even the most pessimistic will have to concede that it is better than reporting increasing unemployment. Jeepers!

AWC
AWC

These “Stats” are all massaged and goal-seeked , tailored to fit assorted political narratives and agendas. Such is the outcome of “Moral Hazard.” We’re ass deep in it now, and must alter our perspectives of things “political” and “economic.”

Bam_Man
Bam_Man

Same number of people now working multiple, low-paying, part-time jobs, while more people drop out of the labor force entirely.

This is good news?

thimk
thimk

maybe symptomatic of the "gig" economy. mystery why no wage inflation of which i would like to see and the accompanying fed rate increase.

douglascarey
douglascarey

Oof, another gut punch to Mish's forecasting abilities.

Yancey_Ward
Yancey_Ward

The people born between 1952 and 1957 are retiring. This is a huge demographic bulge- the post WWII and Korean War births. This will continue until about 2028 when you hit my GenX who are a smaller group.

nic9075
nic9075

It

ReadyKilowatt
ReadyKilowatt

Anecdotally, my company just began a major reorganization with a round of "voluntary early retirement" packages being offered. The scuttlebutt is they had more takers than anticipated, so it must have been a pretty good deal. The company is also bringing in more outside contractors to do work normally done in-house, and I'll bet there will be a few familiar faces showing up with new "contractor" ID badges in the next few months.

Feels like the whole thing is about getting people out of the health insurance plan. Maybe when Bernie "gives" us all free health care we'll swing the pendulum back to in-house labor again.