Snap Analysis: Jobs report shows strength with a caveat

By @ibtimes on

The U.S. private sector in April generated the most jobs since February 2006, but the jobless rate jumped back up to 9 percent from the previous month's 8.8 percent.

As economists try to make sense of these conflicting signals, perhaps the only certainty was that it will take another couple more months of data to figure out exactly where the U.S. economy is headed.

Total U.S. non-farm payroll employment expanded by 244,000 jobs in April according to the Labor Department's survey of employers, well above median forecasts in a Reuters poll for a gain of 186,000 and the strongest reading in 11 months.

However, the separate household survey, from which the unemployment rate is derived, painted an entirely different picture. It showed the number of employed Americans falling by 190,000 on net following a 291,000 rise in March. The number of jobless in that report, meanwhile, rose by 205,000.

The increase in the jobless rate surprised forecasters, who had been looking for a steady reading of 8.8 percent. The unemployment rate had fallen sharply in recent months, though a shrinking labor force was a factor behind the decline.

Had the (labor force) participation remained unchanged, the unemployment rate would still have been 10.1 percent in March, Goldman Sachs economists said in a research note ahead of the April employment report.

The survey of employers, however, showed broad strength, although the pace of payroll employment has done little to whittle away at the ranks of jobless Americans.

The number of unemployed persons, at 13.7 million, changed little in April, the Bureau of Labor Statistics said in a statement.

Here are some other interesting details that emerge from the report, which can be found at http://bls.gov/news.release/empsit.nr0.htm:

* U.S. retail employment posted a large gain of 57,100 jobs, though some economists were suspicious of seasonal adjustments due to a late Easter holiday.

* Construction employment remained anemic, with the sector adding just 5,000 jobs. The housing sector remains depressed and could be a further drag on growth in coming months, but it is now a smaller chunk of the overall economy, which in part mutes its negative effect.

* Surging energy and commodity costs were expected to discourage employers from taking on new workers but that appears not to have happened. The strong payrolls figure suggests business confidence remains strong despite a sharp run-up in energy costs.

* A decline in temporary help services jobs is hard to read. Generally, increases in temporary jobs are seen as a harbinger of future growth in permanent jobs.

*The breakdown showed big increases in professional and business employment -- indicating a more broad-based improvement rather than in simply low-end jobs.

(Reporting by Pedro Nicolaci da Costa, Editing by ChizuNomiyama)

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