NOTE: The Bureau of Labor Statistics Restated Historical Data – So Many of These Data Points Have Changed From Prior Blogs
The U.S. added 164,000 net new jobs in April 2018 and saw the unemployment rate drop from 4.1 percent (for the prior six months) to 3.9 percent, the lowest level seen since the end of 2000. The Federal Reserve defines full employment when the unemployment rate is in the 5.0 percent to 5.5 percent range. No doubt this provides the fuel for the coming June 2018 target rate increase by the Fed.
Year-to-date, the U.S. has added 799,000 net new jobs compared to 707,000 a year ago for the same time period, up 13.0 percent – a strong increase.
The net job gain in the prior 12 months totaled 2.28 million. Total net job gains in the prior 12-months still significantly trails the 3.13 million level seen in February 2015, as shown in the graph. Good news is that the decline is the past three months (with a slight upwards trend).
The U.S. continues the trend of having more jobs than any time in history, as shown in the following graph. From the pre-recession peak in January 2008, total job loss was 8.7 million to the November 2011 trough. Since then, the U.S. has created 18.7 million net new jobs.
Job gains for 2018 are not a simple equation from the prior year, but vary month-to-month on a year-over-year basis. The next table shows the net new job gains monthly since 2016.
Employment in the Leisure and Hospitality sector is a good proxy of the overall health index of the U.S. economy. People do not spend money on vacations, cruises, entertainment, spas or dinners out unless they feel good about the future economy. My premise is that the U.S. economic outlook is healthy as long as the employment growth rate in Leisure and Hospitality exceeds that of the country overall. Current Leisure and Hospitality job growth in the prior 12 months was 1.74 percent versus 1.56 percent for the total economy. Given these data, again I see no recession on the horizon at this time foregoing unanticipated economic shocks.
Average hourly earnings were up 4 cents in April versus March to $26.84. Hourly pay has risen 67 cents in the past 12-months, a gain of 2.6 percent. Hourly earnings monthly since 2012 are shown in the following graph.
Other items in the April 2018 jobs report:
- Number of Persons Unemployed for Less Than 5 Weeks declined by 172,000 from a month, now at 2.115 million versus 2.300 million a year ago — an 8 percent decline
- Long-Term Unemployed (jobless for 27 or more weeks), now at 1.293 million versus 1.633 million a year ago, and down 29,000 from March
- Civilian Labor Force Participation Rate is now 62.8 percent, ever-so-slightly down from a year ago (62.9 percent)
- Unemployment Rate The number of job losers or people that were time employees that lost their jobs was down to 2.598 million in April 2018 versus 3.535 million a year ago
- Employment-Population Ratiois now 60.3 percent versus 60.2 percent a year ago – the bigger the better
- Number of Persons Employed Part Time for Economic Reasons(also known as involuntary part-time workers) are individuals desiring full-time employment but either had their hours cut back or cannot find a full-time job), declined by 34,000 from March and is down to 4.985 million compared to 5.309 million a year ago
- Marginally Attached to the Labor Force(not currently counted in the labor force, want and are available for work and had looked for a job in the prior 12 months) now at 1.362 million was at 1.534 million a year ago. Within that group, 408,000 were classified as Discouraged Workers – persons not currently looking for work because they believe there are no jobs available for them. Discouraged Workers dipped by 476,000 in the past 12 months
- Manufacturing jobs increased by 24,000 in April 2018 (once again think technology and cheap energy) and are up 245,000 in the prior 12-months
- Health Care gained 24,000 jobs in April 2018 and 305,000 in the past 12-months
- Mining(includes oil and gas exploration and production) added 8,000 jobs in the month
- Leisure and Hospitality jobs increased by 18,000 in April 2018 and are up by 279,00 in the past 12-months
To read the entire release from the Bureau of Labor Statistics click https://www.bls.gov/news.release/pdf/empsit.pdf
Many of the reasons that the job growth rate is in the mid 1.5 percent range is that anyone that has marketable skills either already has a job, lives in a locale without demand for their skill set, or really does not want to work.
Overall, this is a robust jobs report.