Part 1 - The real unemployment rate – May 7th
Bottom Line: The story of 2018 has been a lot of great economic stuff packaged around a monthly government jobs report that doesn't add up (at least at first). The ADP private sector jobs report has been consistent and terrific showing 200k+ jobs being added for six straight months. The government jobs report looks like feast or famine from month to month. Overtime the massive revisions in the government's report closely mirrors what the ADP Report gives us from the beginning but the getting there is a wild roller coaster ride. We saw that again with the report for April but with some headline numbers that turned heads as well.
Here are some keys in the report:
Headline unemployment rate 3.9% (down from 4.1% lowest since December of 2000)
164,000 jobs added in April (168k private sector – we actually shed 4,000 government jobs last month)
More revisions totaling a positive 30,000 jobs rolled in
Average job growth for the past three months has been 208,000 jobs per month (which averages out to a number that compares favorably once again to the ADP info for private sector jobs)
Top industries for hiring:
#1 Professional & Business Services (added 54,000 jobs)
#2 tie Healthcare and Manufacturing (added 24,000)
Now for the real unemployment rate once underemployed and long-term unemployed people are accounted for:
Actual: 7.8% down from 8.6% yoy
Three additional relevant points:
1. When the long-term unemployed & marginally employed are factored in - the real unemployment is still double the base reported rate (though nearing historically low levels under 8%)
2. The forgotten folks include 1.3 million are long-term unemployed (unchanged), 5 million are underemployed (unchanged) & 1.4 million are marginally attached to the workforce (improvement of 100k)
3. The labor participation rate dipped to 62.8% (-.1% - lowest since January)
In context this report looks better than it initially appears. 30,000 more jobs added than initially reported in March, an average of 200k+ jobs per month through the first quarter of 2018 and significant year over year improvement in the real unemployment rate.
In part two we'll look at the demographics of the unemployed...