U.S. nonfarm payrolls added 428,000 jobs in April, extending a run of 12 consecutive months and 15 of the last 16 months with gains above 400,000. The average monthly gain over the last 16 months is 551,000 (see first chart).
Private payrolls posted a 406,000 gain in April, the 11th in a row and 14th in the last 16 months above 400,000 (see first chart). The average gain over the last 16 months is 520,000.
Both total nonfarm payrolls and private payrolls are less than 1 percent below their February 2020 levels with total nonfarm down by 1.2 million and private payrolls down just half a million (see second chart).
Gains in recent months have been broad-based. Within the 426,000 gain in private payrolls, private services added 340,000 versus a 12-month average of 463,200 while goods-producing industries added 66,000 versus a 12-month average of 65,300.
Within private service-producing industries, leisure and hospitality added 78,000 for the month versus a 12-month average of 159,500, education and health services increased by 59,000 (versus 50,600), transportation and warehousing added 52,000 jobs (versus an average gain of 39,200), business and professional services added 41,000 (versus 99,000), financial services gained 35,000 (versus 16,200), retail employment rose by 29,200 (versus 45,200), and wholesale trade gained 22,200 (versus 15,700; see third chart).
Within the 66,000 gain in goods-producing industries, durable-goods manufacturing increased by 31,000 and nondurable-goods manufacturing added 24,000 while mining and logging industries increased by 9,000, and construction added 2,000 (see third chart).
Despite the strong, broad-based gains over the past year, only seven of the thirteen industry groups in the employment report are above their pre-pandemic levels. Transportation and warehousing is the largest gainer, with payrolls more than 11.6 percent above pre-pandemic levels (see fourth chart). That may be a positive sign for some of the logistical problems plaguing U.S. businesses. The largest laggards are mining and logging, still 10.6 percent below February 2020, and leisure and hospitality, 8.5 percent below pre-pandemic levels.
Average hourly earnings rose 0.3 percent in April, putting the 12-month gain at 5.5 percent. The average hourly earnings for production and nonsupervisory workers rose 0.4 percent for the month and are up 6.4 percent from a year ago. The average workweek for all workers was unchanged at 34.6 hours in April while the average workweek for production and nonsupervisory held at 34.1 hours.
Combining payrolls with hourly earnings and hours worked, the index of aggregate weekly payrolls for all workers gained 0.6 percent in April and is up 10.0 percent from a year ago; the index for production and nonsupervisory workers rose 0.7 percent and is 11.2 percent above the year ago level. The total number of officially unemployed was 5.941 million in April. The unemployment rate was unchanged at 3.6 percent while the underemployed rate, referred to as the U-6 rate, rose 0.1 percentage points to 7.0 percent in April. In February 2020, the unemployment rate was 3.5 percent while the underemployment rate was 7.0 percent.
The employment-to-population ratio, one of AIER’s Roughly Coincident indicators, came in at 60.0 percent for April, down 0.1 percentage point and still significantly below the 61.2 percent in February 2020. Similarly, the labor force participation rate ticked down 0.1 percentage point in April, falling to 62.2 percent, well below the 63.4 percent of February 2020 (see fifth chart). The lower participation rate translates into a deficit of more than 3 million people from the labor force.
The weaker participation rate is one reason the labor market remains so tight. Based on the latest Job Openings and Labor Turnover Survey (JOLTS), there is a record low 1.03 available workers for each opening (see sixth chart). That shortage is likely to continue driving wages higher.
The April jobs report shows total nonfarm and private payrolls posted more strong gains. Both are close to matching pre-pandemic levels though the results among industry groups vary widely. However, with population growth, labor force participation remains significantly below pre-pandemic rates. Getting people into the labor force would likely help ease upward pressure on wages.
Upward price pressures have resulted in a new, somewhat aggressive cycle of Fed policy tightening, raising the risk of a policy mistake. Furthermore, the Russian invasion of Ukraine and renewed lockdowns in China may be further distorting global supply chains leading to further disruptions to businesses. The outlook remains highly uncertain, and caution is warranted.
