Hiring snapped back in April as employers added 288,000 jobs, and the unemployment rate fell sharply to 6.3 percent, the Labor Department said Friday in a report that provoked as many questions as answers about the economy.
The sizzling hiring report came in the same week that the government reported nearly flat-line annual growth of just 0.1 percent for the first three months of the year. Most mainstream economists blamed the stagnant growth on the harsh winter weather, which weighed on hiring from December through February, and they predicted a spring comeback.
Evidence of that was plentiful in the April jobs report. Powering the strong growth was the white-collar professional and business services sector, which added 75,000 jobs last month. The hard-hit construction industry bounced back in the spring weather, adding 32,000 jobs. Retailers, also hit hard by the winter weather, increased payrolls by almost 35,000.
Previous hiring estimates for February and March were also revised upward by a combined 36,000 to further the view of an improving jobs market.
“The job market is kicking into a higher gear. It is still far from running at full speed, but the trend lines are good,” said Mark Zandi, the chief economist for forecaster Moody’s Analytics. “The gains are broad across industries, regions and pay scales. The job market feels better and better.”
Because the job gains were solid across all 17 major sectors covered in the Labor Department’s survey, it suggests the economy is firing on all cylinders. It led Jason Furman, the head of the White House Council of Economic Advisers, to stress “that the pickup in job growth observed in April does not reflect any outlier performance in a single industry or handful of industries.”
Under normal circumstances, a whopping four-tenths of a percentage point drop in the monthly unemployment rate would be cause for cheer. But Friday’s steep drop from 6.7 percent last month pulled against the positive news on hiring and raised questions.
That’s because participation in the labor force fell by about 807,000 workers in April, according to the report from the Bureau of Labor Statistics. New entrants in the workforce, a number that usually offsets declines in the labor market at least partially, fell by 126,000 last month. It suggests that the falling unemployment rate is due in part to a shrinking workforce, making Friday’s report a mixed bag.
“The headline number was strong, with healthy gains in non-farm payroll growth and a sharp decline in the unemployment rate,” said Chad Moutray, the chief economist for the National Association of Manufacturers, noting his sector continues to add jobs. “Yet the data also show that the participation rate remains at a 30-year low, and manufacturing hours and compensation were somewhat down for the month.”
The drop in April’s labor-force participation rate was a steep four-tenths of a percentage point, the same as the drop in the unemployment rate, but this is not a trend that’s yielding a clear explanation. For example, in March, the labor force grew by 503,000, roughly two-thirds of April’s drop.
“The participation rate has shown no clear trend in recent months and currently is the same as it was this past October,” the BLS report said.
Viewed over a longer horizon, the labor force grew by 484,000 over the first four months of the year, notwithstanding last month’s drop in the participation rate, said Stuart Hoffman, the chief economist for PNC Financial in Pittsburgh. The number of discouraged workers laboring part time but in search of full-time work also fell.
“The decline in the official unemployment rate to 6.3 percent could be partly reversed in the next few months as the labor force rebounds, but the unemployment rate is on a clear downward path toward 6 percent late this year,” Hoffman said, offering a more positive view.
The number of long-term unemployed, who haven’t held jobs in more than half a year, fell by 287,000 in April, and it appears many of them were among the 807,000 who’ve left the workforce. With congressional Republicans opposing any further extensions of unemployment benefits, it appears many people have simply exited the workforce altogether.
In a statement, House Speaker John Boehner, R-Ohio, blasted the Obama administration for a shrinking workforce.
“Earlier this week, we learned that economic growth largely stalled at the start of the year. And while it’s welcome news that more of our friends and neighbors found work in the past month, this report also indicates more than 800,000 Americans left the workforce last month, which is troubling,” said Boehner.
The White House accentuated the positive. Appearing on the CNBC channel, Labor Secretary Thomas Perez looked past the erratic numbers on labor force participation and instead touted the strong hiring in the professional and business services sector, which are middle-class and upper middle-class jobs.
“These jobs being created are good jobs,” he said.
APRIL BY THE NUMBERS
_ Professional and business services, up 75,000.
_ Retail, up 34,500.
_ Construction, up 32,000.
_ Leisure and hospitality, up 24,000.
_ Temporary help services, up 24,000.
_ Health care, up 18,700.
_ Government jobs, up 15,000.
_ Manufacturing, up 12,000.
_ Transportation and warehousing, up 11,300.
_ Financial services, up 6,000.