April Jobs Report Solid, But Concerns for Housing Remain

Total nonfarm payroll employment increased by 211,000 in April, rebounding from a tepid March report, the Bureau of Labor Statistics reported Friday.

BLS said the unemployment rate fell in April to 4.4 percent, the lowest since 2007, as job occurred in leisure and hospitality, health care and social assistance, financial activities and mining. Over the year, the unemployment rate has declined by 0.6 percentage point, while the number of unemployed has fallen by 854,000. The number of unemployed persons, at 7.1 million, changed little in April.

BLS revised up total nonfarm payroll employment for February from +219,000 to +232,000, and revised down March numbers from +98,000 to +79,000. With these revisions, employment gains in February and March combined were 6,000 lower than previously reported. Over the past three months, job gains have averaged 174,000.

The report said average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $26.19 in April. Over the year, average hourly earnings have risen by 65 cents, or 2.5 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 6 cents to $21.96.

John Silvia, chief economist with Wells Fargo Securities, Charlotte, N.C., said job gains were fairly broad-based. “The overall quality of jobs being created improved, with a substantial acceleration in hiring for full-time positions and deceleration in part-time jobs,” he said.

“The employment data through the first four months of this year have been significantly impacted by a number of seasonal influences,” Silvia said. “Unseasonably mild winter weather in the Northeast and Midwest allowed for construction activity to ramp up a little earlier than usual this year, leading to strong gains in construction jobs in January and February. With hiring rising earlier in the year, there was less of subsequent pick up this spring, leading to smaller-than-usual seasonally-adjusted gains in March and April.”

Mark Fleming, chief economist with First American Financial Corp., Santa Ana, Calif., said the April gains were good news for the economy as a whole, but raised concerns for the housing sector.

“Specifically for the housing market, construction employment, which needs to expand to increase the pace of housing starts and increase the housing stock, was a disappointment with only 5,000 new jobs reported,” Fleming said. “The pace of construction-job growth has been declining on a year-over-year basis for over a year. This month’s increase of 5,000 jobs is only a 2.6 percent increase from a year ago.”

Fleming said the ability to increase housing starts is highly dependent on construction employment. “Home builders are reporting that the lack of construction workers is hampering their ability to increase production, which is a desperately needed source of supply, as most markets already have very tight inventories of homes for sale,” he said. “We have been underbuilding residential housing relative to demand since 2009.”

Nonetheless, Silvia said the improved mix of jobs being created “should pull more job seekers into the labor force. The acceleration in full-time positions is also consistent with the recent acceleration in household formations and homeownership,” he said.

BLS said the number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.6 million in April and accounted for 22.6 percent of the unemployed. Over the year, that figure fell by 433,000.

The labor force participation rate, fell to 62.9 percent in April from 63 percent in March and has shown little movement over the past year. The employment-population ratio, at 60.2 percent, was also little changed over the month but improved by 0.5 percentage point since December.

BLS reported the average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.4 hours in April. In manufacturing, the workweek edged up by 0.1 hour to 40.7 hours, and overtime edged down by 0.1 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.7 hours.