Saturday, 3 May 2008

Small Decline in April Non-farm payrolls

The Bureau of Labor Statistics reported yesterday that US non-farm payrolls fell -20k in April. February and March were revised down slightly. Highlights include:

Goods-producing -110k
Service-providing 90k
Government 9k

As always the Birth/Death adjustment is worth taking a look at below. According to the BLS 267k jobs were added in April including 45k in contruction and 72k Professional and business services. That seems highly unlikely. Remember you can't subtract the B/D number from the non-farm payroll number as the NFP number is seasonally adjusted and the B/D number is not.

Also, it's worth noting that hourly earnings rose just $0.01 and hours worked declined 0.1 hours - signs typically seen in recesions. Of course many of the headlines harped on the surprising drop in the unemployment rate from 5.1% to 5.0%.

Obviously when an economy needs around 150k new jobs created per month just to keep up with population growth, when employment actually contracts the only way the unemployment rate can go down, is if people are leaving the workforce - that is they have stopped looking for work.

This same euphoria was shown back in February when the unemployment rate unexpectedly fell to 4.8%. That was subsequently reversed to 5.1% in March. Expect the April drop in the unemployment rate to be reversed in the coming months. The trend in the unemployment rate is still up.