As the market eagerly awaits Friday's official unemployment report, two private firm readings indicate continued strengthening of the labor market. ADP and Challenger, Gray & Christmas Inc. today both reported good -- but not great -- news about employment in April. Jobs are growing, but not quickly enough to have much impact on high unemployment.
According to Challenger (.pdf), job cuts in April dropped 43% to 38,326 compared to March's number of 67,611. Last month's number was also 71% lower than the 132,590 in April 2009. To put last month's layoffs into perspective, they were the lowest since July 2006. At this point, job cuts are on pace to be the lowest since 2000. Firms are definitely ending their firing spree.
This is clearly positive. An economy will generally have some job cuts somewhere, but with numbers this low, jobs created can more easily net out firings. And layoffs have plummeted from a year ago. Interestingly, the sectors leading those job cuts included government and non-profit agencies. Those losses are largely from local and state governments, which are feeling increased budgetary pressure due to economic hardship.
Unfortunately, hiring isn't happening very quickly according to John A. Challenger, CEO of the company. He says:
Hiring is likely to increase in the coming months, but many employers are stubbornly slow to hire in the onset of an expansion. They will first do what they can to maximize the productivity of existing employees through measures such as upgrading technology and expanding the hours of part-time workers.
ADP's data helps illuminate the trend Challenger describes. New jobs are now overshadowing losses, barely. Employment increased by 32,000 in April, says ADP. This is the third straight month it has reported positive job growth. It was also the largest increase since January 2008.
While this report shows the labor market moving in the right direction, its pace is a crawl. The gain of 32,000 new jobs isn't much when there were 15 million Americans unemployed in March. So although it's good to see job growth, hiring will have to ramp up significantly to make much of a dent in the unemployment rate.
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