INDICATOR: April Employment Report
KEY DATA: Payrolls: +288,000; Private: +273,000; Unemployment Rate: 6.3% (down 0.4 percentage point)
IN A NUTSHELL: "It is clear that firms are hiring again but we still need wages to rise faster if the economy is to really accelerate."
WHAT IT MEANS: Wow! That is the best way to describe the April employment report. Payrolls surged and the gains were across the entire economy. Yes, there was lots of hiring in the more traditional low paying areas such as retail, restaurants and temporary positions, but those gains were generally not out of the normal. At the same time we had solid increases in construction, manufacturing, wholesaling, professional and technical services, health care and education, all good paying industries. That we cannot argue the we are only adding low paying jobs is another indicator that the economy is improving across the board. And local governments are back in the hiring business, especially for teachers. That is good for my son who is looking for a full-time music teacher position. Anyone got one? If there was an issue with the report, it was with the household data, which is where we get the unemployment numbers. It was great to see the rate decline from 6.7% to 6.3%, the lowest rate since October 2008. But the large drop is not consistent with conditions. There was a huge decline in the labor force, the second time in seven months the change was outsized. The October 2013 drop (which was even bigger) was followed by an almost equally large rise in November and I suspect that will be repeated this time around. That implies we could see a rebound in the unemployment rate. I had expected the rate to possibly hit 6.5% and I am guessing that is where it could be in May. This is important because average hourly wages and earnings went nowhere. There may be fewer workers available but firms don't feel they have to pay more, even if there are growing complaints about the inability to find qualified workers.