Job Growth Accelerates in April
Job growth accelerated in April, reversing Marches downward move, according to a report from the Department of Labor released Friday. 211,000 new jobs helped the unemployment rate fall to a 10-year low of 4.4%.
- Nonfarm payrolls increased by 211,000
- Seasonally adjusted U3 unemployment rate: 4.4% (-.1%)
- Broader U6 unemployment: 8.6% (-.3%)
- Number of unemployed persons (27+ weeks): 7.1 million
- Number of long-term unemployed persons: 1.6 million
- Labor force participation rate: 62.9 %
- Employment-population ratio: 60.2 %
- Involuntary part-time: 5.3 million (-281,000 from April)
- Marginally attached to workforce: 1.5 million
- Discouraged workers: 455,000
Inside the jobs numbers
Of the 211,000 jobs gained, leisure and hospitality led all sectors with a healthy 55,000 new jobs. The largest gains came in restaurants, bars, and clubs.
Rounding out the service sector growth, health care and social assistance added 37,000 jobs while financial activities added 19,000.
Mining continued to grow jobs in April (+7,000). The sector has gained 44,000 jobs since reaching a low point just before the 2016 election.
Manufacturing and construction added 6,000 and 5,000 jobs respectively.
Over the past three months, jobs grew at an average pace of 174,000 per month even with February’s dismal 79,000 figure.
The broader U6 measure of unemployment is nearing the pre-recession figure of 8.4% while the more commonly reported U3 number is lower than in November of 2007.
As U6 included those marginally attached and involuntary part-time workers, it indicates that more people are taking lower-paying jobs or unable to find jobs than before the great recession.
The labor force participation rate dipped in April to 62.9% (-.1%) but is still on a trend line of improvement that started in early 2016. As the rate approaches the pre-recession figure of 66%, wage pressures should return to their 3-4% annual growth. Hourly wages grew at 2.67% in April while weekly wages grew at 2.47%.
The Trump Factor
President Donald Trump’s pro-business policies are having a decided effect and more is likely to come. Tax reform, health care reform and regulatory reform will combine to form the most business-friendly economic climate America has seen in decades.
Trump’s tax reform will pull in trillions of dollars held overseas due to punitive tax rates in the U.S. which will be used to fund capital investments by businesses. Moving manufacturing facilities back to America will lead to more hiring in good paying jobs as will the subsequent growth in businesses that provide support to the major manufacturers.
Health care reform is expected to remove ill-conceived restrictions put in place by Obamacare. The former president’s health law incentivizes employers to keep full-time employment lower than they normally would. Once they hire a 51st full-time employee, the business is responsible for providing health insurance that meets the federal requirements. The cost increases are astronomical if just one additional person is hired or moved to full-time.
Regulatory reform will reduce the burdens placed on businesses. Dealing with bureaucracy requires resources that do not promote businesses’ core goals. The lower the regulatory burden the easier it is for a company to grow which will create a need for more workers. After Trump reduced coal regulations and ended the ‘war on coal’ job growth in the mining and mining support industries has reversed its downtrend and added a significant number of jobs.