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First Cut: April Employment Situation puts unemployment rate at 3.6%, lowest since 3.5% in December 1969

The Employment Situation for April affirmed that the labor market is stretched. In the Household Survey, the unemployment rate fell two-tenths to 3.6%, its lowest reading since 3.5% in December 1969. Decreases in the number of unemployed (down 387,000 to 5.824 million) far outpaced the decrease in the number of employed down 103,000 to 156.645 million). The employment-to-population ratio stayed at 60.6%, while the participation rate dipped two-tenths to 62.8%. The U6 unemployment rate was flat at 7.3%.

The Establishment Survey reported an increase of 263,000 for non-farm payrolls in April plus a net upward revision of 16,000 to the prior two months. Private payrolls rose 236,000. Goods producers added 34,000, most of which was concentrated in construction with 33,000 added to payrolls. Service providers added 202,000 workers with something of a mixed bag for occupational groups. Professional services added 76,000 new workers, of which 18,000 were for temporary positions. Healthcare and social assistance added about 53,000 new positions. Leisure and hospitality was up 34,000, possibly related to milder weather. Retail lost 12,000 jobs, while transportation and warehousing was up 12,000.

Government was up 27,000 as workers for the 2020 Census started to be hired. The decennial Census can make it hard to properly seasonally adjust payrolls. However, even if the total was excluded from the April headline, this would still be a strong and above-trend report.

The April increase blew past market expectations and was above the first quarter average of up 186,000 and the six-month moving average of 207,000. These are strong numbers and do not suggest any easing in a tight labor market.

If the workweek was one-tenth shorter at 34.4 hours, earnings were up 0.2% month-over-month and up 3.2% compared to a year ago.

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