Jobs, Jobs, and More Jobs – May 6, 2019
As the economic expansion approaches its 10th birthday in July (NBER), the U.S. Bureau of Labor Statistics unwrapped an early present: a strong jobs report and the lowest unemployment rate in 50 years.
Nonfarm payrolls rose by a stronger-than-expected 263,000 in April, and the unemployment rate fell 0.2 percentage points to 3.6%. It’s the lowest reading since May 1969, when the jobless rate bottomed at 3.4% (St. Louis Federal Reserve).
As the graphic above illustrates, monthly payroll data can be noisy, i.e., volatile. We see strong readings – some north of 300,000 – and see some weak readings – shy of 50,000.
And volatility can whipsaw sentiment among analysts, and how the report is reflected in the financial media.
In January, we had a strong number and excitement ensued. In February, the weak payroll report gave way to worries that growth was quickly slowing. Analysts breathed a sigh of relief in March, and in April, well, rinse and repeat.
I want to be careful not to throw cold water on April’s jobs report. A 263,000 increase in nonfarm payrolls is impressive. At a minimum, it throws another bucket of cold water on the idea the economy was set to enter a recession. It also illustrates that an expanding economy creates new jobs, as growing businesses require more workers.
Looking ahead, much will depend on economic growth. An acceleration would likely provide us with relatively stronger numbers, though not every month.
If growth were to slow, it would likely be reflected in substandard job growth.
Most importantly, look past monthly gyrations. The overall trend is the most important. Today, the trend is encouraging.
Created 2019-05-06 15:00:48