Below is my monthly look inside the BLS Employment Situation Report. And here’s a different post with rate reaction.
Keep in mind that there are two BLS Surveys: the Establishment and the Household. The Establishment surveys about 141,000 businesses and government agencies, representing approximately 486,000 individual worksites. It is taken each month during the week which includes the 12th of the month. The Household Survey is a survey of households taken each month during the week which included the 12th of the month. It is a survey of 60,000 households.
Each item below is suffixed with (H) if it is from the Household Survey and (E) if it is from the Establishment Survey and (B) if it combines the two.
– Headline Nonfarm jobs was +115,000. (E)
– Unemployment Rate was down to 8.1% compared to 8.2% in March 2012 (B)
– Average hourly wage $23.38 up from $23.37 in March 2012 (E)
– Average work week was 34.5 hours the same as March 2012 (E)
– Private jobs were +130,000. Government jobs were -15,000 (E)
Reading beneath the surface:
-Good producing jobs were +14,000. This is important and weak. The 2 previous months were +38,000 and +36,000 . (E)
-The size of the civilian labor force fell from 154,707,000 to 154,365,000 a decline of 342,000. This explains why the Unemployment rate went down. Bad restaurants have no lines.(H)
-The labor participation rate (percent of adult non-institutionalized population who are part of the labor force) fell to 63.6% from 63.8%. It was 64.2% a year ago. This, not the unemployment rate, is the number which should get everyone’s attention. Some of this is structural and some is cyclical. (H) In his press conference of last week, Bernanke sidestepped the issue of declining labor participation rate. The employment/population ratio fell from 58.5% to 58.4%. (H)
– the size of the civilian population rose by 180,000 in March. With a labor participation rate of 63.6% 114,480 more jobs were necessary to keep pace with population growth. We had 520 more jobs than that. In other words, 99.8% of the growth in jobs merely kept pace with population growth. (H)
According to the 4 week moving average of Initial Jobless Claims 1,447,000 people lost their jobs in the last 4 weeks. That normalizes to 1,567,500 lost jobs in a calendar month (there are about 13 4 week periods in a 12 month year.) This is down from the previous month’s 1,637,000 lost jobs/month.
If 1,567,500 people lost their jobs last month and we gained 115,000 jobs, how did that happen? The answers are in the Household Survey. The labor market is highly dynamic. A lot of people move in and out each month for various reasons.
In April 2012 BLS measured 4 sets of people entering or leaving the jobs market:
– Job losers and persons who completed temporary jobs was 6,852,000 down 168,000 from March’s Job Losers and down 1,329,000 from April 2011. (H)
-Job leavers was 997,000. This includes anyone who retired or voluntarily left working. This was down 120,000 from previous month and up 53,000 from April 2011.(H)
-Reentrants was 3,341,000. Reentrants are people who were looking for a job a found one. This was +72,000 from previous month and -46,000 from April 2011.(H)
-New entrants were 1,384,000. These are previously unemployed persons who never worked before and who are entering the labor force for the first time. This was -49,000 from previous month and +62,000 from April 2011.
The presentation of the total change in jobs is like looking at the final score of a game. The details tell the story:
– 115,000 more people are working
– 342,000 fewer people are in the civilian labor force
– 168,000 fewer people lost their jobs
– 120,000 fewer people left their jobs
– 72,000 more reentrants obtained jobs.
This very weak report will send rates lower and create another refi wave.
Rates Hit Record Lows After April Jobs Report