The Bureau of Labor Statistics (BLS) released the Employment Situation report for April today and the numbers are promising. In April total payrolls expanded by 165,000, with the private sector adding 176,000 and government subtracting 11,000. Homebuilding payrolls expanded by 13,300. The February and March payrolls were revised up by a total of 114,000.
The unemployment rate declined another tenth of a percentage point (technically 0.06%) from 7.6% to 7.5%, and this month for the right reason: more people found jobs. The household survey shows that in April the ranks of the employed rose by 293,000, enough to absorb the 83,000 decline in the number of unemployed persons as well as the 210,000 expansion of the labor force (technically not necessarily the same people). This is a refreshing change from last month when the decline in the unemployment rate was based on the labor force declining faster than the number of persons employed.
Analysts will be watching the next few months carefully to see if we avoid another one of the spring slowdowns that have rattled the last two years of the recovery. Indications are that the January 1 end of the 2% payroll tax holiday may be starting to restrain growth and the March 1 across-the-board spending cuts do not bode well. Our forecast is for a slowing of both employment and GDP growth from first quarter rates as the year unfolds before reaccelerating next year.
The next few months will provide a clearer picture.