In an economy that seems to be moving out of the bell jar and into an early recovery, the lagging jobs market makes this notion a bit harder to nail down. Employers shed 539,000 jobs in April, the smallest chasm in six months of deep gouges, the Labor Department reported this morning. Still, job losses were steep, and the unemployment rate made another leap to 8.9 percent from 8.5 percent in March.
What's the good news? The number of jobs lost in April came in at a bit less than economists had expected. The size of the labor force jumped 683,000 in April, which economist Richard Moody of Forward Capital says is entirely responsible for pushing the unemployment rate up. Also, the average workweek was stable, if still low, at 33.2 hours, and the manufacturing workweek increased by 0.2 hour.
The government added 72,000 jobs last month, largely temporary jobs that were related to the Census 2010. Keep in mind, however, that economists tend to discount those jobs. "There is no indication of how long these workers will be needed," Morgan Stanley economists Ted Wieseman and David Greenlaw wrote in a morning note. "In any case, this is an important distortion that should be excluded from the payroll tally. Thus, the census-adjusted payroll result for April was -602,000."
What does the report tell us about the job market? For one, many job seekers are finding it very difficult to become re-employed. The number of unemployed workers who have been out of work from 27 weeks or more—otherwise known as the long-term unemployed—jumped by 498,000 and now stands at 3.7 million, or nearly triple since the start of the recession.
The report also indicates that the job cutting continues to be widespread across all major private sector industries except healthcare, which continued to add jobs, but at a slower rate than it did last year.
When will the job losses stop? You can likely expect them to continue dropping in size from the monster cuts earlier this year, which included 741,000 in January and 681,000 in February. However, Federal Reserve chairman Ben Bernanke told Congress earlier this week that the country is likely to continue to see considerable job losses and elevated unemployment. "Businesses are likely to be cautious about hiring, implying that the unemployment rate could remain high for a time, even after economic growth resumes," Bernanke said.
What are experts saying?
"Given that the overall rate of decline in economic output is moderating from the 6 percent plus plunges recorded in Q4 and Q1, it is natural for non-farm payrolls (which are a coincident economic indicator) to also start to drop at a lesser pace than seen during the truly horrific November-March span. We thus expect the reported private sector job declines to diminish in coming months. With that said, we still seem to be some time from stabilization in employment conditions, and even further from sustained growth in payrolls." — Joshua Shapiro, chief U.S. economist at MFR
"The report is consistent with the notion that the pace of deterioration is slowing but we are still a long way from the point of stability in both the labor market and the broader economy. ... The unemployment rate continues to soar but the household survey actually showed a very surprising 120,000 increase in April. Thus, the latest jump in the jobless rate was attributable to a spike in the labor force. However, we wouldn't read too much into a single month's worth of data from the household survey — it can be very volatile since it is based on an extremely small sample size (about 0.06 percent of households). Most importantly, it still looks like the unemployment rate will move above 10 percent in coming months which will exacerbate the credit losses confronting the financial sector. " — Ted Wiesman and David Greenlaw of Morgan Stanley Research
"Many are interpreting the April employment report as yet another sign that the economy is 'stabilizing,' but the more accurate interpretation of these signs is that the economy's pace of contraction is slowing, which is not quite the same as stability and s still a long way from the economy actually improving." —Richard Moody, chief economist at Forward Capital