- by New Deal democrat
My question over the past year had been whether “decleration” into a “soft landing”would turn into “deterioration” towards a recession. That has now been overtaken by events in the form of T—-p‘s tariffs and trade wars. So my focus now is looking for hard data, rather than reports of sentiment, indicating whether or not the effects of those stupefying actions have begun to hit.
I had thought last month’s employment report would be the last good one. It was not, because April was another good employment month.
Below is my in depth synopsis.
HEADLINES:
- 177,000 jobs added. Private sector jobs increased 167,000. Government jobs increased by 10,000, despite federal government layoffs. The three month average was an increase of +155,000, on par with the lowest average last summer.
- The pattern of downward revisions to previous months continued this month. February was revised downward by another -115,000, and March was revised downward by -43,000, for a net decrease of -58,000.
- The alternate, and more volatile measure in the household report, increased by 436,000 jobs. On a YoY basis, this series increased 2,449,000 jobs, or an average of 204,000 monthly.
- The U3 unemployment rate was unchanged at its repeated 12 month high of 4.2%. Since the three month average is 4.167% vs. a low of 3.9% for the three month average in the past 12 months, or an increase of 0.267%, this means the “Sahm rule” has been UN-triggered once again.
- The U6 underemployment rate declined -0.1%, to 7.8%, down -0.2% from its 3+year high in February.
- Further out on the spectrum, those who are not in the labor force but want a job now also declined sharply by -241,000 to 5.634 million, about average in the past four years.
Leading employment indicators of a slowdown or recession
These are leading sectors for the economy overall, and help us gauge how much the post-pandemic employment boom is shading towards a downturn. This month they were mixed:
- the average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, declined -0.2 hours to 40.9 hours, and is down -0.7 hours from its 2021 peak of 41.6 hours.
- Manufacturing jobs decreased by -1,000. This series had been in sharp decline, but it has leveled off in the past six months.
- Within that sector, motor vehicle manufacturing jobs fell -4700.
- Truck driving continued its rebound for the second month, up 1,400.
- Construction jobs increased another 11,000.
- Residential construction jobs, which are even more leading, declined -700 from their post-pandemic high one month ago. Whether this is a decisive peak remains to be seen.
- Goods producing jobs as a whole increased 11,000, and are at their highest level in 17 years! This is especially important, because these typically decline before any recession occurs. But on a YoY% basis, these jobs are only up less than 0.3%, which is very anemic although not quite recessionary.
- Temporary jobs, which have declined by over -550,000 since late 2022, rose this month, by 3,600. The bottom for this metric remains October 2024.
- the number of people unemployed for 5 weeks or fewer declined -177,000 to 2,185,000, vs. its 12 month high of 2,465,000 last August, and its October low of 2,109.000.
Wages of non-managerial workers
- Average Hourly Earnings for Production and Nonsupervisory Personnel increased $.10, or +0.3%, to $31.06, for a YoY gain of +4.1%, up 0.2% for the month and an average YoY gain for the past 12 months. Importantly, this continues to be well above the 2.4% YoY inflation rate as of last month.
Aggregate hours and wages:
- The index of aggregate hours worked for non-managerial workers rose a small 0.1% to a new record high. This measure is also up slightly over 1.5% YoY, its highest such gain in three years.
- The index of aggregate payrolls for non-managerial workers also rose 0.4%, and is up 5.7% YoY, its biggest YoY gain since December 2022. This is also well above the inflation rate, meaning a continuation in the ability of households to increase consumption.
Other significant data:
- Professional and business employment increased 17,000. These tend to be well-paying jobs. This series peaked in May 2023, but bottomed in October 2024, and is up 0.3% since then. It remains lower YoY by -0.1%, which in the past 80+ years - until now - has almost *always* meant recession. This is vs. last spring when it was down -0.9% YoY.
- The employment population ratio increased 0.1% to 60.0%, vs. 61.1% in February 2020.
- The Labor Force Participation Rate increased 0.1% to 62.6%, vs. 63.4% in February 2020.
SUMMARY
Although there were some negatives, this - like last month - was generally a good, positive report. Aside from the headline numbers, goods producing jobs in the aggregate held up quite well, as did several components including construction jobs. Several sectors that had been languishing — trucking, temporary jobs, and professional and business jobs — continued their rebound. Aggregate hours and payrolls also rose, and the latter in particular remains well ahead of inflation. The unemployment rate, employment population ratio, and the labor force participation rate also all improved.
The only relatively weak spots were the slight downturns in manufacturing and manufacturing hours, as well as residential construction jobs.
So this was once again good, positive report, with no signs of deterioration month over month. One special items to especially note this month is that the data for the report is gathered in the earlier part of the month, so the impact from tariff “liberation day” was only just beginning.
