The post-winter slowdown that the US has experienced the past three years had been showing signs of re-emerging in 2013, but Friday’s employment report complicates the story.
The BLS announced that payrolls climbed by 165,000 in April, but perhaps more importantly the revisions to prior months revealed that February and March were better than originally thought, having created 114,000 more jobs than had been posted in the earlier reports. The February revisions brought the total for that month to an impressive 332,000.
The numbers for March and April are still less healthy than the winter averages, indicating that a slowdown has still occurred. But even so, they also indicate that the decline may not be as precipitous as other economic indicators have suggested. April’s number is very close to the 169,000 average of the past twelve months, and of course both March and April will continue to be revised in future reports. All the usual caveats apply.
The causes of the unfortunate annual mid-year slowdown are abstruse — not because these causes are implausible but because it is difficult to know how much weight, if any, to assign each possibility.
The seasonal adjustment problems that were behind some of the fluctuations in recent years have likely faded by now, but we can’t know how much with any precision (or even how big they were in the first place).
Further complicating the matter is that major events preceding the downturns of recent years have come around the same time — a burgeoning and intensifying Euro crisis in 2010 and 2012; the Japanese earthquake and higher oil prices resulting from the Arab Spring in 2011; and this year it might be the impact of higher payroll taxes (working on a lag) or the threatening impact of the sequestration cuts.
Seasonal hiring differences between large firms and small firms, the timing of policy measures — QEs 2 and 3 were telegraphed or announced in the months of August and September respectively, just before economic activity quickened in those years — and also the pattern of student loan disbursements all might play a role as well.
The issue remains mysterious. But then again, economy-watching in real time always is — and given that we’re talking about such a limited sample size, perhaps it’s best not to read too much into it. All we really know is that the pace of jobs growth remains positive but woefully inadequate.
As for the April payrolls report, some excerpts:
Total nonfarm payroll employment rose by 165,000 in April, and the unemployment rate was little changed at 7.5 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, food services and drinking places, retail trade, and health care.
Household Survey Data
The unemployment rate, at 7.5 percent, changed little in April but has declined by 0.4 percentage point since January. The number of unemployed persons, at 11.7 million, was also little changed over the month; however, unemployment has decreased by 673,000 since January. …
Establishment Survey Data
Total nonfarm payroll employment increased by 165,000 in April, with job gains in professional and business services, food services and drinking places, retail trade, and health care. Over the prior 12 months, employment growth averaged 169,000 per month. …
The change in total nonfarm payroll employment for February was revised from +268,000 to +332,000, and the change for March was revised from +88,000 to +138,000. With these revisions, employment gains in February and March combined were 114,000 higher than previously reported.