Highlights of the April non-farm payrolls report:
- Prior reading was 192K (revised to 203K)
- Two month net revision +36K
- Unemployment rate 6.3% vs 6.6% expected
- Participation rate 62.8% vs 63.2%
- Private payrolls 273K vs 215K expected
- Average hourly earnings 0.0% vs 0.2% exp
- Avg weekly hours 34.5 vs 34.5 exp
- Change in household employment -73 vs +250 expected
- Underemployment rate 12.3% vs 12.7% prior
Ahead of the release there were whispers in the 230K to 250K range but it was even stronger. The unemployment rate is the real headline grabber but it actually would have risen if not for the plunge in the participation rate.
non-farm payrolls
My quick take is that it’s not as strong as the first reactions suggest but it’s still a very good report. Average hourly earnings and the drop in participation are poor signs for the economy and don’t point to sustained employment near 288K. Still, it’s good news for the US dollar because it will make the Fed more comfortable talking about hikes, even if there are no signs of wage pressure.
Unemployment rate rate at the lowest since 2008
But how much of that decline is due to people dropping out of the labor force?
Participation rate
At the end of the day, however, unemployment was at 7.2% in August when the participation rate was the exact same — that’s a 0.9 percentage point improvement and none of it was due to falling participation.
