April Unemployment Rate Plunges to 6.3 Percent on Gain of 288,000 Payroll Jobs but Details Still Show Some Weaknesses in Employment Situation
The BLS monthly household survey, released today, showed that the unemployment rate plunged 0.4 percentage points in April to 6.3 percent, a new low for the recovery. The broad U-6 unemployment rate, which takes into account discouraged workers and involuntary part-time workers, fell to 12.3 percent, also a new low for the recovery.
In another welcome development, the percentage of unemployed who have been out of work for 27 weeks or more also fell to a new low for the recovery. Elevated long-term unemployment has been one of the most painful features of the Great Recession. Almost five ears into the recovery, it still remains far above historical levels.
A separate survey of establishments showed a gain of 288,000 jobs. February and March payroll gains were revised upward by a total of 36,000. Those revisions make this the first time in more than two years that the economy has gained more than 200,000 jobs for three consecutive months. The gains were broadly based, with goods producing industries, services, and governments all showing an increase in jobs.
As with every report on the employment situation, not all of the data were good. The most prominent negative in the latest report was a decrease of 806,000 in the size of the civilian labor force. The number of people reported as employed by the household survey fell by 73,000. Although the household and establishment surveys move together in the long run, they often differ substantially on a month-by-month basis, partly because of sampling error and partly because of differences in methodology. Average weekly hours of production and nonsupervisory employees were unchanged and hourly earnings gained a scant three cents.
Today’s relatively strong employment report contrasts sharply with weak first-quarter GDP growth reported earlier in the week. The reasons for the differences will become more apparent as additional data is released in coming months, but at least two explanations suggest themselves.
First, the 0.1 percent GDP growth rate reported in the advance estimate for Q1 2014 is based mostly on data from early in the quarter, supplemented by extrapolations based on past experience. Most observers think harsh winter weather explains a large part of the slowdown. As data come in from later in the quarter, after some of the worst weather had passed, the final GDP growth rate for the quarter may rise.
Second, it may be that some people who were reported as employed during the first quarter were not able to produce much. Both the establishment and household surveys count some people as employed even if bad weather forces them to work short hours or even miss entire days of work.
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