The U.S. economy had a net gain of 290,000 jobs in April, but the national unemployment rate still managed to rise to 9.9% from the rate of 9.7%, where it had stood since January. There are now 15.3 million unemployed Americans, according to the Bureau of Labor Statistics.
This marks the first unemployment rate increase since October of last year, but the biggest jump in additional jobs since March 2006. Economists predicted the rate to remain 9.7%, but only expected 185,000 more jobs. Clearly, they need better models.
Even though the rate went up, there is no reason for alarm -- this is mostly due to seasonal adjustment factors and more Americans in the workforce. The important thing is that the labor market recovery continues to trend in the right direction.
Revisions also brought quite good news. The number of new jobs in March was revised to 230,000 from 162,000, and the February number changed from a 14,000 jobs lost to 39,000 gained. That means the U.S. labor market has experienced net job growth for all of 2010, as a handful of jobs were added in January as well.
Here's how many jobs were lost or gained over the past few years:
The rate movement looked like this:
The first chart above is the one that tells a clearer story. The U.S. economy is steadily adding more jobs.
So what industries accounted for all those new jobs? Here are some highlights:
As you can see, it's good news pretty much across the board. While the U.S. Census continued to add a significant number, even without its help the economy would have still added 224,000 new jobs. Interestingly, the number of temporary workers was less than last month's number of 40,000, which could indicate that employers are becoming more comfortable hiring permanent staff.
The big enigma this month is how we could have so many more jobs, but a jump in the unemployment rate. The labor force increased in size by 805,000 workers, which far overshadows the 290,000 additional jobs when calculating the percentage of unemployed. The labor market participation rate increased by 0.3%, which explains much of the 0.2% jump in the unemployment rate.
So what caused more labor participation? It's a little hard to tell, as, oddly, the number of discouraged workers actually increased to the same approximate level in February:
Instead, we're more likely looking at a seasonality effect. The numbers above have all been seasonally adjusted (except discouraged workers). The unadjusted unemployment rate fell considerably. Here's the interaction between these two versions of the rate:
There are a few troubling things to note about this report, however. The first is that the number of unemployed for more than 27 weeks continues to rise. The number now stands at over 6.7 million Americans:
The broadest measure of unemployment "U-6," which measures total unemployed plus discouraged, marginally attached, and those forced to work part-time for economic reasons also rose to 17.1% from 16.9%. But this rise mimics the 0.2% rise in the reported rate. In fact, the unadjusted rate for U-6 declined from 17.5% to 16.6%, while the simple rate fell from 10.2% to 9.5%. In other words, the broader U-6 rate fell further -- 0.9% while the regulate unemployment measure only fell by 0.7%. This is likely where you're getting the additional Americans entering the labor force that caused the adjusted rate to rise in April.
If this report tells us anything, then it says we shouldn't expect a significant drop in the rate this month either, as the seasonally adjusted rate tends to remain above the unadjusted rate in May. But when summer hits, we'll likely see the rate decline again to 9.7% or less -- assuming job growth continues the current trend.
Our poll results weren't too stellar this month. Just 7.69% of respondents thought the rate would rise to 9.9%. There was a little too much optimism this month as nearly three-quarters of those polled thought the rate would remain at 9.7% or decline. Here are those results:
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