How Much Trouble Remains?

The economic news continues to move in the right direction, although most reports remain merely be 'less bad' rather than good. The morning's nonfarm employment figures are a prime example. Nonfarm payrolls fell 539,000 in April, which was less than the 600,000 consensus estimate.

Despite the smaller than expected decline, there are still plenty of reasons to be concerned. Previous employment losses were slightly worse than first reported. In addition, April's payroll figures were bolstered by a rise of 72,000 in government employment, most of which reflects hiring for the 2010 Census. Moreover, April's smaller loss still translates into an annual loss of nearly 6.5 million jobs.

There were a few glimmers of hope. The employment diffusion index rose nearly eight points to 28.2 percent. The average workweek was also unchanged and the factory workweek inched up a tenth of an hour to 39.6 hours. Total hours worked declined 0.6 percent in April and are down at a 8.4 percent annual rate over the past three months, which is not quite as severe as in the first quarter.