April 2015 Employment Report

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According to the Bureau of Labor Statistics’ (BLS) establishment survey, non-farm payroll employment increased by 223,000 jobs in April -- in line with expectations of 220,000. However, combined February and March employment gains were revised downward by 39,000 (March was cut from +126,000 to +85,000). Meanwhile, the unemployment rate (based upon the BLS’s household survey) ticked down to 5.4% -- more a result of workers finding jobs (192,000) than individuals dropping out of the workforce (19,000). 

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Observations from the employment report include:

The disparity in jobs gains between the establishment (+233,000) and household (+192,000) surveys was less pronounced in April.

The downturn in oil-sector (part of the Mining & Logging category) employment continued in this report, although the BLS said employment in oil and gas extraction fell by 3,000. Challenger, Gray & Christmas reported that nearly 21,000 oil-sector job cuts were announced in April, although it is doubtful all of those workers were actually terminated in April.

Nearly 66% (140,000) of private-sector job growth occurred in the three super-sectors typically associated with the lowest-paid jobs: Profession & Business Services; Education & Health Services, and Leisure & Hospitality.

The ongoing narrowing in the number of Manufacturing versus Food Service & Drinking Places (FS&DP) jobs continued in March. Interestingly, in January 2000, there were 9.168 million more U.S. manufacturing jobs than FS&DP jobs. As of April 2015, the gap has shrunk to 1.301 million. Although the number of manufacturing jobs was 180,000 higher than April 2014, the concurrent growth rate in FS&DP jobs was more than double that (+387,000). 

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The employment-population ratio was stable at 59.3% for a fourth month, but the number of employment-age persons not in the labor force rose by 19,000 to a new record near 93.2 million. 

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The labor force participation rate ticked higher by 0.1 percentage point, to 62.8%; the LFPR has been tightly range-bound around an average of 62.8% since April 2014. Average hourly earnings of all private employees rose up by $0.03, resulting in a 2.2% year-over-year increase. For all production and nonsupervisory employees (pictured above), hourly wages rose $0.02 (+1.9% YoY). With the CPI running at an official rate of -0.1% (YoY), wages are technically rising in real (inflation-adjusted) terms. The amount of time people worked each week, meanwhile, remained at 34.5 hours. 

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Finally, full-time jobs decreased (-252,000) while part-time jobs jumped (+437,000). Full-time jobs have been trending higher since December 2009, but are still 1.1 million short of the pre-recession high. Part-time jobs, by contrast, have been stuck in a channel between roughly 27 and 28 million.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.