Thread: U.S. job growth rebounds sharply, unemployment rate falls to 4.4 percent

U.S. job growth rebounds sharply, unemployment rate falls to 4.4 percent

Fri May 5, 2017 | 7:58pm EDT
By Lucia Mutikani | WASHINGTON

U.S. job growth rebounded sharply in April and the unemployment rate dropped to 4.4 percent, near a 10-year low, pointing to a tightening labor market that likely seals the case for an interest rate increase next month despite moderate wage growth.

Nonfarm payrolls surged by 211,000 jobs last month after a paltry gain of 79,000 in March, the Labor Department said on Friday. April's job growth, which was broad-based, surpassed this year's monthly average of 185,000.

There were hefty increases in leisure and hospitality, healthcare and social assistance as well as business and professional services payrolls.

The drop of one-tenth of a percentage point in the jobless rate took it to its lowest level since May 2007 and well below the most recent Federal Reserve median forecast for full employment.

"These developments should keep the Fed firmly on track to hike rates again in June and should motivate a hawkish shift in the interest rate forecasts they will release at that meeting," said Michael Feroli, an economist at JPMorgan in New York.

The hiring rebound supports the U.S. central bank's contention that the pedestrian 0.7 percent annualized economic growth pace in the first quarter was likely "transitory," and its optimism that economic activity would expand at a "moderate" pace.

The Fed on Wednesday kept its benchmark overnight interest rate unchanged and said it expected labor market conditions would "strengthen somewhat further." It raised rates by a quarter of a percentage point in March and has forecast two more increases this year.

Financial markets are pricing in a roughly 83 percent probability of a 25-basis-point rate increase at the Fed's June 13-14 policy meeting, according to CME Group's FedWatch program.

WAGE GROWTH LAGS

The U.S. economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

Republican President Donald Trump, who inherited a strong job market from the Obama administration, has vowed to sharply boost economic growth and further strengthen the labor market by slashing taxes and cutting regulation.

Trump later hailed the numbers in a tweet: "Great jobs report today - It is all beginning to work!"

In April, average hourly earnings rose 7 cents, or 0.3 percent. However, downward revisions to previous months lowered the year-on-year increase to 2.5 percent, the smallest gain since August 2016, from 2.6 percent in March.

But there are signs wage growth is accelerating as labor market slack diminishes. A government report last week showed private-sector wages recorded their biggest gain in 10 years in the first quarter.

With the labor market expected to hit a level consistent with full employment this year, payroll gains could slow amid growing anecdotal evidence that firms are struggling to find qualified workers. That could also boost wages.

"While there is still some labor market slack, it is diminishing rapidly. This is likely to put upward pressure on wages," said David Berson, chief economist at Nationwide Insurance in Columbus, Ohio.

A broad measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, dropped three-tenths of a percentage point to 8.6 percent, the lowest level since November 2007.

The employment-to-population ratio rose one-tenth of percentage point to an eight-year high of 60.2 percent. This measure has risen for four straight months.

The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, fell to 62.9 percent from an 11-month high of 63 percent in March. It has rebounded from a multi-decade low of 62.4 percent in September 2015, and economists see limited room for further improvement as the pool of discouraged workers shrinks.

Construction payrolls rose by 5,000 last month and manufacturing payrolls increased by 6,000. Leisure and hospitality payrolls jumped by 55,000 in April. Professional and business services payrolls rose by 39,000. Healthcare and social assistance employment increased by 36,800.

Retail payrolls gained 6,300 after two straight months of declines. Retailers including J.C. Penney Co Inc (JCP.N), Macy's Inc (M.N) and Abercrombie & Fitch (ANF.N) have announced thousands of layoffs as they shift toward online sales and scale back on brick-and-mortar operations.

Government payrolls jumped by 17,000 last month as an increase in hiring by local governments offset a decline in federal government employment.

http://www.reuters.com/article/us-us...-idUSKBN1810BZ

Construction payrolls rose by 5,000 last month and manufacturing payrolls increased by 6,000. Leisure and hospitality payrolls jumped by 55,000 in April. Professional and business services payrolls rose by 39,000. Healthcare and social assistance employment increased by 36,800.

Healthcare and social assistance employment increased by 36,800.

Government payrolls jumped by 17,000 last month as an increase in hiring by local governments offset a decline in federal government employment.

Okay, folks, here's why the health care bill and tax reform are so important.

See what's happening with the jobs? Local government creates almost 3 x the number of manufacturing jobs. That's not gainful employment, that's employment paid for with mandated taxation that robs your earnings and defies economic productivity. See those hirings in "healthcare" and "social assistance", over 6 times as many new jobs as manufacturing jobs. These are jobs paid for primarily by government, insurance and tax-exempt status, not saying they aren't needed to take care of our sick and elderly, I'm sure they are, but unless you've got the manufacturing and production jobs, investment and economic activity underneath it to support it, it's debt and higher debt.

We need to create 1 manufacturing job for every other 5 jobs created in the US economy for all those jobs to be paid for. So, for a total new jobs report of 211,000, which is great news, we should have had 30,000 new manufacturing/mining jobs created instead of just 6,000 and 9,000 (mining) for 15,000.

To get there, we have to fix this damn health care mess, tell the Senate to get it done, so long as all the tax mandates are repealed and no one has to buy or provide health insurance and health insurance is repealed from the McCarran-Ferguson Act, the rest of it is just bean-counting in a bankrupt environment and doesn't mean squat, then move simultaneously to tax reform and demand the 15% corporate/business tax cut, then you will see for the first time in 40 years, what this economy is supposed to do which is support and sustain itself. It changes everything for the better for everyone, especially as we fix the bad trade deals and crack down on immigration at the same time.

When this President promised to make our country rich again, he not only meant it, he actually knows how to do it. But he can't do it by himself, he needs Congress to push his agenda through when legislative changes are necessary.