115,000 Jobs Added in April; Industry Economists Share Thoughts
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The Bureau of Labor Statistics May 8 released employment data for April, reporting 115,000 jobs were added and the unemployment rate was unchanged at 4.3%.
Gains occurred in health care, transportation and warehousing, and retail trade, and declines continued in federal government employment.
The change in total nonfarm payroll employment for February was revised down by 23,000, from a loss of 133,000 to a loss of 156,000. The change for March was revised up by 7,000, from 178,000 to 185,000. With the revisions, the change for February and March combined is 16,000 lower than previously reported.
MBA SVP and Chief Economist Mike Fratantoni noted that the April employment report showed some positive trends, but was somewhat hampered by a less positive three-month spread.
“Other trends over the past year also paint a different picture. The labor force participation rate has declined from 62.6% to 61.8%. The labor force, the total number of people either employed or actively looking for work and counted as unemployed, has declined by more than 1 million. And the number of people employed has declined by more than 1.2 million. The U-6 measure, now at 8.2%, captures some of this shift in individuals leaving the labor force,” Fratantoni said.
“All in, the job market is holding together reasonably well, but it is not as strong as the April headline would suggest. The implications are that there is not enough job market weakness to change the direction of Fed policy. MBA expects that the Fed will hold off on rate cuts for the foreseeable future, and there is enough concern about the labor market to keep at least some potential homebuyers hesitant about their own job situation,” he continued.
“The steadier labor market footing may help improved housing fundamentals translate into stronger sales activity. On paper, conditions look better than they did a year ago: affordability has improved, supported by lower mortgage rates and income growth that has outpaced house price growth; inventory is higher; and buyers have more room to negotiate,” said Sam Williamson, senior economist with First American, Santa Ana, Calif. “But those gains only matter if households feel confident enough to act. Rising mortgage rates have pared back some of the improvement, and buyers worried about the economy are more likely to stay cautious. A labor market that is holding firm won’t solve affordability, but it can give would-be buyers more confidence to move from browsing to bidding.”
“However, two solid months do not make a breakout. Hiring showed tentative signs of broadening in April, with gains in transportation and warehousing and retail trade, but it remains concentrated, with health care and social assistance accounting for nearly 54,000 jobs. Meanwhile, hiring intentions have softened in recent months, according to NFIB survey data, as employers navigate geopolitical uncertainty and higher energy costs. Even so, the report’s resilience is encouraging, suggesting labor-market fundamentals remain solid despite the volatility,” Williamson continued. “The next test is whether that resilience turns into a more durable upswing. For that to happen, firms may need a clearer path toward stability in global energy markets and the broader economic outlook before ramping up hiring. If uncertainty eases, it could give the housing market another boost by supporting job mobility, household formation and the confidence needed to move. Until then, ongoing uncertainty and rate volatility are likely to keep buyers cautious, tempering the potential for a stronger market rebound.”
