April Payrolls Report: The Biggest Miss Since 2021 as Unemployment Rate Increases

Introduction

Before the release of the payroll report today, we had anticipated a slowdown. The question was how significant it would be. We also wondered if Yellen had prematurely disclosed the weaker figure to Japan before their multiple interventions this week to prevent them from squandering billions in intervention dry capital.

Report Findings

The Bureau of Labor Statistics (BLS) revealed that the US added only 175K jobs in April, a nearly 50% drop from the upward revised 315K. This is the lowest print since October 2023 and a significant miss from the estimated 240K. In fact, this was the biggest miss since December 2021.

As usual, prior data was net revised lower, with the change in total nonfarm payroll employment for February revised down by 34,000, from +270,000 to +236,000, and the change for March was revised up by 12,000, from +303,000 to +315,000. With these revisions, employment in February and March combined is 22,000 lower than previously reported.

Reasons Behind the Unexpected Payrolls Plunge

The unexpected drop in payrolls can be attributed to the government, which added just 8,000 jobs in April, the least since December 2021. The result would have been even worse if it wasn't for a massive 363K addition from the birth death model.

Not only was the Establishment survey affected, but the Household survey also showed that in April, the US added just 25K jobs, a significant drop from the 498K in March. This means that the already record divergence between the number of people employed and those who have jobs expanded by another 150K.

Unemployment Rate

The unemployment rate also increased more than expected, from 3.8% to 3.9%, the highest since January 2022, versus estimates of an unchanged print. The unemployment rate for Blacks decreased, offsetting an increase in the prior month. The jobless rates for adult women, teenagers, Whites, Asians, and Hispanics showed little change over the month.

Wages and Participation Rate

Despite the increase in unemployment, the participation rate remained unchanged at 62.7%. Wages also took a step back with average hourly earnings rising 0.2% MoM, below the expected 0.3% increase and down from last month's 0.3% print. On an annual basis, earnings rose 3.9%, down from 4.1% last month and below the 4.0% estimate.

Job Gains in April

Looking at the composition of the April job gains, the BLS notes that job gains occurred in health care, in social assistance, and in transportation and warehousing, offset by a big slowdown in government hiring. Health care added 56,000 jobs in April, in line with the average monthly gain of 63,000 over the prior 12 months. Employment in social assistance increased by 31,000 in April, led by a gain in individual and family services. In April, transportation and warehousing added 22,000 jobs, with gains in couriers and messengers and warehousing and storage.

Conclusion

Employment in retail trade continued to trend up in April. The industry had added an average of 7,000 jobs per month. In April, employment increased in general merchandise retailers, building material and garden equipment and supplies dealers, and health and personal care retailers. Electronics and appliance retailers lost 3,000 jobs. Construction employment changed little in April, following an increase of 40,000 in March. Over the prior 12 months, construction had added an average of 22,000 jobs per month. Employment in government changed little in April. Over the prior 12 months, government had added an average of 55,000 jobs per month. In April, local government employment was unchanged, following an increase of 51,000 in March.

This report raises several questions about the state of the US economy and the effectiveness of government interventions. What do you think about these developments? Share this article with your friends and discuss. Sign up for the Daily Briefing, which is every day at 6 pm, to stay informed about these and other important topics.