Friday, May 3, 2013

Good News From This Morning's Unemployment Report

This morning's unemployment numbers bring good news for a good reason. Jobs growth is stronger than expected. February and March numbers were revised UPWARD and April came in higher than projected as well.

The official unemployment rate ticked down to 7.5% and 165,000 jobs were created in April, higher than the 150,000 consensus forecast.

All in all, it definitely looks like the economy is chugging along at a moderate pace of growth. While nothing to get excited about, it does appear that any recession is off the table of current worries for the U.S. economy, unlike Europe and others.

Hiring Gains Pace as Jobless Rate Falls to 7.5% has the breaking good news:

"U.S. job growth picked up in April and the unemployment rate ticked down again, suggesting steady but still-measured economic growth.

Employers added 165,000 jobs last month, the Labor Department said Friday. The unemployment rate, obtained by a separate survey of U.S. households, fell one-tenth of a percentage point to 7.5% as more people found work. That was the lowest rate unemployment rate since December 2008.

Economists surveyed by Dow Jones Newswires had forecast that nonfarm payrolls would rise by 148,000 and the unemployment rate would hold steady at 7.6%.

In a positive sign, figures for the prior two months were revised up significantly—by a combined 114,000. The economy added 138,000 jobs in March, compared with the initially reported 88,000, and 332,000 jobs in February, compared with the previously reported 268,000. February's revised number is the strongest since May 2010.

U.S. employers were adding more than 200,000 jobs a month through much of the winter, contributing to expectations of faster growth this year.

Instead, more recent data underscore the choppy growth that has marked the economy since the recession ended nearly four years ago. Overall, the fits and starts have averaged out to fairly tepid expansion of about 2% a year during the recovery.

"Through the volatility, we believe the trend is still at least 150,000 per month, probably better, which is more than enough to keep unemployment trending down," Jim O'Sullivan, chief economist at High Frequency Economics, said ahead of Friday's release. . . .

Americans have had to contend with higher taxes since the start of the year, and new government spending cuts that started in March.

That may be starting to show in the latest employment data. Federal government payrolls dropped by 8,000 last month, though the U.S. Postal Service—which isn't affected by the cuts from so-called sequester—accounted for more than half of that. State and local governments also trimmed payrolls.

Private companies added 176,000 jobs, accounting for all of April's gains. Employment increased in professional and business services such as temp jobs, at restaurants and bars, retailers and in health care.

Manufacturers held payrolls steady. . . .

Friday's report also said that average earnings rose 4 cents to $23.87 an hour, while the average workweek decreased 0.2 hour to 34.4 hours. Wage gains help consumers maintain spending.

A broader measure of unemployment, which includes discouraged workers and part-time workers seeking full-time employment, rose to 13.9% from 13.8%."

See also U.S. economy creates 165,000 jobs in April.

Summing Up

Lots of things to like in this morning's report and a couple of things not to like.

The revisions upward from earlier months combined with the better-than-expected April jobs created represent the good news.

The decline in average hours worked and the increase in the broader unemployment numbers to 13.9% represent the bad news.

All in all, better than anticipated but nothing to get too excited about. That said, for stock market followers, it should give prices another reason to go up today.

That's my preliminary take.

Thanks. Bob.

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