The Employment Situation Report (Jobs Report) was released this morning and only 115k jobs were added in April with the Unemployment Rate Dropping to 8.1% - mainly due to over 500k people dropping out of the work force.
The Unemployment rate is actually dropping at a fairly rapid rate, but most of the drop has been due to discouraged workers dropping out of the work force - with the workforce participation rate now at 63.6% - the lowest since the end of 1981. During the big drops in Unemployment in the late 70's and early 80's, workforce participation stepped up dramitically as women were entering the workforce in greater numbers. Today, it is the under 25 worker who is tending to sleep in his parents basement and an OWS protestor who is failing to get on the employment escalator.
The underlying details were not as dissappointing as the headline number. Temp Employment is still growing at a rate that predicts around 200k total NonFarm Employment additions, on average, over the next quarter. Temp Employment leads total employment by 3-5 months, so employment growth in the 150k-250k range is somewhat baked into the cake.
Additionally, the last two months payroll growth numbers were revised up by 50k total. The miss last month of 120k is now 154k. What looked like a slippage last month is now magically back into the range of expectations. February has been revised up by 16k to now up 259k - above the run rate of 150k-250k that I believe the Economy is now producing.
Additionally, the last two months payroll growth numbers were revised up by 50k total. The miss last month of 120k is now 154k. What looked like a slippage last month is now magically back into the range of expectations. February has been revised up by 16k to now up 259k - above the run rate of 150k-250k that I believe the Economy is now producing.
With the backward revisions to NonFarm payroll growth, the ADP report is looking like a better and better predictor. For month to month changes, the ADP report is actually a statistically better report than the first release of NonFarm payrolls. It is smoother and is revised less. It has less of a reporting problem as ADP has access to the actual payroll counts of its subscribers to build its sample, while the NonFarm payroll relies on people like yours truly (I fill out an establishment survey form for my wife's business) to actually go an fill out a form each month. The Establishment Survey is getting better as the form is online and you now receive email reminders, but it still is pretty choppy as evidenced by the many backward revisions from month to month.
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