By Kim Kennedy, Manager of Forecasting, Dodge Data & Analytics
BEDFORD, MA – May 4, 2018 – In April, employers added 164,000 jobs to their payrolls, slightly less than the 193,000 projected by a Bloomberg poll of economists. This moderate rate of job growth, combined with a decline in the labor force, was enough to push the unemployment rate down to 3.9% during April – the lowest rate since December 2000. April’s low unemployment rate is getting a great deal of attention in the press since a rate below 4% is a rare phenomenon. According to the Wall Street Journal, it has happened, “only a few times over the past 70 years – during the Korean War in the early 1950s, during the Vietnam War in the late 1960s and early 1970s, and during the tech boom of 2000”. But a deeper look into the numbers suggests that it was April’s 236,000 decline in the labor force that caused the unemployment rate to dip so low.
Regardless of the exact number, unemployment has reached amazingly low levels thanks to continuous job growth since October 2010. This 91-month expansion has made it the longest span of job growth on record. Furthermore, this year’s gains have remained robust, with a remarkable average of 200,000 jobs added per month, even stronger than last year’s average of 182,000. Fiscal stimulus coming from the December tax cuts and increasing government spending is likely a major factor behind the strength.
One disappointing element of the April jobs report, however, lies with wage growth. Average hourly earnings inched up just 4 cents in April and rose a very modest 2.6% over the past year. Despite the long period of job expansion and the resulting tightening of the labor market, wages have not kept pace. By comparison, the last time the unemployment rate hit 3.9%, wages were growing at a pace above 4.0%. Economists suggest that globalization, slower productivity growth, or the higher unemployment rate measure that includes discouraged workers (now at 7.8%) as possible reasons behind lagging wages, but none of these provide a fully satisfying explanation.
In April, the number of private sector jobs rose by 168,000, while the number of government jobs slid by 4,000. Goods-producing industries added 49,000 jobs over the month with manufacturing accounting for 24,000 of these and construction 17,000. The number of service-producing jobs grew by 119,000 in April with the largest number of these jobs coming from professional and business services, up 54,000, and education and health services, up 31,000.
The increase in construction jobs was expected with the onset of warmer spring weather in much of the northern U.S. Still, of those 17,000 jobs, specialty trade contractors gained 11,000, nonresidential building grew 5,000, and residential building advanced nearly 4,000. Heavy and civil engineering jobs, however, declined by 3,400 over the month. Over the year, construction jobs have increased 3.7% with residential building improving 5.1%, specialty trades 4.2%, nonresidential building 3.1%, and civil engineering 1.2%.
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Allison Heard | 104 West Partners | firstname.lastname@example.org
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