With a punishing winter behind them, employers added a sizzling 288,000 jobs in April, the government said Friday in a report that also saw a confusingly sharp drop in the unemployment rate to 6.3 percent.
The jobs report came days after the Commerce Department reported nearly flat-line annual growth of just 0.1 percent for the first three months of 2014. Most mainstream economists blamed that on the harsh winter weather, which weighed on hiring from December through February, and they predicted a comeback.
And there was ample evidence of that Friday. Powering the strong monthly growth was the white-collar professional and business services sector, adding 75,000 jobs in April. The hard-hit construction industry bounced back, adding 32,000 new jobs in the month. Retailers, also hit hard by the winter weather, increased payrolls by almost 35,000.
President Barack Obama, appearing with German Chancellor Angela Merkel in the White House Rose Garden on Friday, briefly hailed the solid numbers and called on Congress to raise the minimum wage and help workers struggling in a difficult economy.
“All told, our businesses have now created 9.2 million new jobs over 50 consecutive months of job growth,” Obama said. “The grit and determination of the American people are moving us forward, but we have to keep a relentless focus on job creation and creating more opportunities for working families.”
Previous hiring estimates by the Labor Department for February and March were revised upward by a combined 36,000, furthering 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 major sectors covered in the government survey, it suggests that growth is coming along evenly across the economy.
The strong hiring also had economists boosting their growth forecasts for coming months.
“The report fits in nicely with our stronger growth outlook for the second quarter and over the balance of the year,” said Scott Anderson, the chief economist for Bank of the West in San Francisco.
Usually a whopping four-tenths of a percentage point drop in the monthly unemployment rate would be cause for cheer. Instead, it prompted head-scratching Friday.
“Helpful headlines, but disappointing details,” said the headline of an analysis by Bank of America Merrill Lynch economist Michelle Meyer.
Friday’s drop in the jobless rate from 6.7 percent in March raised questions because participation in the labor force fell by about 807,000 workers in April, according to the monthly report. New entrants into the workforce, a number that usually offsets declines in the labor market at least partially, fell by 126,000 last month.
“The labor force participation rate has been on a downward trend during this recovery, and for the third time in the last seven months the rate is at an all-time low last seen in 1978,” said Keith Hall, who headed the Bureau of Labor Statistics from 2008 to 2012 and is now a researcher at George Mason University in Virginia. “Although the labor-force participation rate can be volatile from month to month, this critical job market measure is failing to bounce back from the recession and represents a major concern.”
It’s why financial markets looked past the strong jobs numbers Friday and viewed the entire report with more caution.
“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 that 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.”
Even the Bureau of Labor Statistics weighed in, noting in the report that the “participation rate has shown no clear trend in recent months and currently is the same as it was this past October.”
Here why there’s so much confusion in the numbers: In March, the labor force grew by 503,000, roughly two-thirds of April’s 807,000 drop.
Over the first four months of 2014, the labor force on average has grown by 484,000 a month, 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 looks as if 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 touted the strong hiring in the professional and business services sector, which comprises middle-class and upper middle-class jobs.
“These jobs being created are good jobs,” he said.