U.S. hiring slowed down despite adding 175,000 jobs in April
KEY TAKEAWAY:According to the Bureau of Labor Statistics (BLS) recent report, employment in the U.S. increased in April 2024 at a lower pace, gaining 175,000 additional jobs, while the unemployment rate increased to 3.9%.
Employment
In Brief: Employment numbers in April, while positive, had the weakest performance since October 2023. We have been expecting a slowdown in the labor market for a few months. This month’s report may be signaling that momentum shift has begun.
Diving in: Other payroll survey data indicates a slowdown in the labor market, with weekly hours decreasing slightly to 34.3 and estimated real wages falling the past three months, assuming recent inflation rates hold in April. This contributes to a great deal of uncertainty about where inflation and the labor market are headed, which can slow business expansion and economic growth.
Unemployment
The Big Picture: The U-6 unemployment rate, which includes discouraged, underemployed, and unemployed workers in the country, increased to 7.4% in April, returning to the upward trend seen from December to February. On the other hand, the U-3 unemployment rate, which indicates only the number of unemployed people actively seeking a job, reversed its 0.1% drop in March returning to 3.9% in April.
What Does This Mean?: The rise in the U-3 unemployment rate, along with a steady labor force participation rate, indicates a labor market that is cooling.
The chart above tracks the monthly national employment figures.
The unemployment rate measures the percentage of the labor force that is currently without a job. The national unemployment rate has remained steady throughout 2023 and now into 2024, fluctuating between 3.7% and 3.9%.
U-3 unemployment rate is the most commonly reported rate in the United States, representing the number of unemployed people actively seeking a job. The U-6 rate covers discouraged, underemployed, and unemployed workers in the country.
The labor force participation rate is an estimate of an economy’s active workforce. YTD the U.S. labor force participation rate ranged between a low of 62.5% and a high of 62.8%, according to the U.S. Bureau of Labor Statistics.
How We Matched Up
Geographic Solutions: Job creation finished well below Geographic Solutions' expectations of 251,000. However, our economist accurately forecasted a 0.1% increase in this month's unemployment rate.
The Wall Street Journal: The Wall Street Journal's expectations of 240,000 additional jobs being added to the labor market was above what was recorded in the labor market report. Moreover, their initial unemployment rate forecast of 3.8% was slightly under what was reported.
ADP: According to ADP’s latest report, the private sector added a sizeable 192,000 jobs in April.
Key Takeaway: The Private Education & Health Services and Trade, Transportation, & Utility industries combine to add 147,000 jobs in April, constituting more than 80% of all employment growth.
Why: Private Education & Health Services has been a major driver of employment expansion over the last year and has the benefit of being inflation-proof compared to other sectors. Trade, Transportation, & Utilities employment seems to have picked up since the beginning of the year despite fears that the Baltimore bridge collapse would disrupt supply chains.
Stock Down: Information, Professional & Business Services
Key Takeaway: Information, Professional & Business Services industries saw the largest decline in jobs this past month, shedding a combined total of 12,000 jobs in April.
Why: Although Professional & Business Services experienced a lot of growth in the scientific and technical services (+17,100), it was dragged by losses in administration and support services (-22,700).
Will job creation remain robust over the coming months?
Based on the numbers from the latest report, we anticipate employment growth will slow down but will continue to add jobs at a slower pace in the coming months. This indicates that businesses are still looking to expand but more gradually.
Do workers or employers have more power in the labor market?
Neither side has a definitive upper hand, but it appears that the decline in unfilled job openings is giving employers more influence in the job market.
How has the labor market shifted since March 2023?
The labor market has continued to add jobs without slowing down despite widespread expectations of a recession.
Geographic Solutions derives its employment forecast and unemployment rate forecast from internal data on the number of job openings, searchers, and employment and unemployment applications filed on Geographic Solutions' state client sites. The forecast uses unemployment claims data from the U.S. Department of Labor (USDOL).
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