Unemployment Rate at 50-Year Low
The Bureau of Labor Statistics’ April employment report beat expectations, as nonfarm payroll employment jumped by 263,000 and the unemployment rate fell to a 50-year low.
BLS reported the unemployment rate declined by 0.2 percentage point to 3.6 percent in April, the lowest rate since December 1969. Over the month, the number of unemployed persons decreased by 387,000 to 5.8 million. The labor force participation rate declined by 0.2 percentage point to 62.8 percent in April but was unchanged from a year earlier. The employment-population ratio was unchanged at 60.6 percent in April and has been either 60.6 percent or 60.7 percent since October 2018.
BLS revised up total nonfarm payroll employment for February from +33,000 to +56,000 and revised down March from +196,000 to +189,000, for a net gain of 16,000. After revisions, job gains have averaged 169,000 per month over the past three months.
The report noted job gains in professional and business services, construction, health care and social assistance.
“Once again, job growth was stronger than expected in April, and even with a weaker showing in February, there have been almost 170,000 jobs per month added over the past three months,” said Mike Fratantoni, Chief Economist with the Mortgage Bankers Association. “With hiring so strong, the unemployment rate has fallen to its lowest level since 1969, and wages continue to grow at a strong pace.”
Fratantoni noted a healthy job market is the most important support for the housing market. “With mortgage rates still low, more households may consider buying a home, which is great news for the housing market and overall economy,” he said.
Sarah House, Global Economist with Wells Fargo Securities, Charlotte, N.C., said April’s 263,000 job gain shows the labor market remains strong. “Wage growth should pick up again with the labor market still tightening, even as the 50-year low in the unemployment rate exaggerates the improvement,” she said.
“This summer will mark the longest recovery period in history,” said Elizabeth Norton, Managing Research Director with Transwestern, Houston. “The number of job openings has outpaced the number of people looking for work, an indicator of a tight labor market. However, this could also indicate a potential skills mismatch, a growing concern for several companies. This mismatch could slow hiring during the balance of 2019, as finding and hiring talent becomes increasingly challenging.”
The report said average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents in April to $27.77. Over the year, average hourly earnings have increased by 3.2 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $23.31.
The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour to 34.4 hours in April. In manufacturing, both the workweek and overtime were unchanged (40.7 hours and 3.4 hours, respectively). The average workweek for production and nonsupervisory employees on private nonfarm payrolls held at 33.7 hours.
Odeta Kushi, Deputy Chief Economist with First American Financial Corp., Santa Ana, Calif., said for wage growth to continue its upward trend, the prime-age labor force participation must continue to rise. She noted while the prime-age labor force participation rate continues to be below the 2007 level and the long-run trend, there is room for further growth to normal levels of 83 percent which could push wage growth to as high as 3.8 percent.
“The prime-age labor force participation rate remains modestly below the longer run average of about 83 percent, implying there is continued opportunity to draw more workers off the sidelines,” Kushi said. “This level of participation suggests continued strong wage growth in the months ahead. That’s good news for potential home-buyers this spring, who will benefit from increased purchasing power and the added confidence to buy.”
