U.S. Jobs: April Numbers Are Strong, But Slowdown Looms
OK, then: The April employment numbers are in and — while they aren't as white hot as February — they're still not bad. The jobs market added a respectable 428,000 jobs for April, spread broadly across the various sectors which the Bureau of Labor Statistics tracks.
For the first time in recent memory, however, the numbers for the previous months were revised downward. February dropped from a blistering 750,000 to a still considerable 714,000, while March blipped downward from 431,000 to 428,000 (the same figure that was just reported for April, interestingly enough).
The three-month trailing average is still 523,000, which is around 50,000 less than the whole-year monthly average for 2021. To me that says things continue to improve, albeit less forcefully than they did last year. But then, the jobs market is almost back on par with where things stood in February 2020.
As the latest BLS report puts it "The unemployment rate remained at 3.6 percent in April, and the number of unemployed persons was essentially unchanged at 5.9 million. These measures are little different from their values in February 2020 (3.5 percent and 5.7 million, respectively) ... "
Happy Days Are NOT Here Again, Though
The Wall Street Journal captured its prevailing mood well with the lead sentences for its reporting on this latest jobs report: "Friday is shaping up to be a big day in markets after the previous day's swoon. In addition to digesting the biggest stock market fall since 2020, investors will focus on Treasury yields and a jobs report that narrowly beat expectations."
Looks like the Fed's recent interest rate hike, the war in Ukraine, and stock market turmoil are completely eclipsing the jobs report. Normally "narrowly beat expectations" would be cause for relief, if not celebration, rather than the odor of disappointment conveyed in the WSJ story. Oh well: So it goes, I guess.
That said, it's certainly not bad news in and of itself. The Washington Post's lead is much more upbeat: "U.S. employers added 428,000 jobs in April, capping a year of solid growth, adding more fuel to an already robust recovery." Likewise, NPR's headline is in that same vein: The U.S. jobs market continues its strong comeback from the pandemic.
Thus, the perspective on what this latest report tells us varies, as usual, from what drives the bus for the source that's looking at the numbers. Methinks the WSJ's focus on markets and finance explains its more downbeat assessment, while the Post and NPR — both focused more broadly on national news, society, culture, and the people involved — are more inclined to be upbeat.
It sure is an interesting divergence, though.
What the Numbers Themselves Have to Say
As the BLS report asserts "Job gains were widespread" — that's their shorthand for saying that growth applies to many, if not most, of the sectors they track. Here are some of the details they reported for April:
Leisure and hospitality added 78,000 jobs, of which 44,000 were in food services and drinking places, and another 22,000 in accommodations. Despite up-and-down monthly figures that add up to ongoing improvement since the post-pandemic crash, this sector remains down by 1.4 million jobs (8.5 percent) since February 2020. That means it still has ample room to grow going forward.
Manufacturing grew by 55,000 jobs, with 31,000 in durable goods (transportation equipment +14,000 and machinery +7,000) and nondurable goods 24,000 (food manufacturing +8,000 and plastics and rubber products +6,000). Manufacturing is down by just a hair from February 2020 levels: 56,000 jobs (0.4 percent). That means this sector is just one more identical jobs report away from achieving parity.
Transportation and warehousing got a 52,000 bump, with 17,000 new jobs in warehousing and storage, 15,000 going to couriers and messengers, 13,000 for truck transportation, and 4,000 for air transport. The numbers for this sector are 674,000 ahead of February 2020 levels, with warehousing and storage accounting for 467,000 of that gain, and couriers and messengers 259,000 likewise. This is the first of five sectors to surpass the totals from February 2020 (pre-COVID-19) in this month's report.
Professional and business services grew by 41,000. The sector is up by 738,000 from April 2020, which makes it the second of five positive sectors in this month's report.
Financial activities added 35,000 jobs, with 20,000 in insurance carriers and related activities, along with 6,000 for nondepository credit intermediation, and 5,000 in securities, commodity contracts and investments. This sector is 71,000 ahead of February 2020 numbers, which makes it the third of five positive sectors in this month's report.
Healthcare employment increased by 34,000 jobs, of which the vast majority — 28,000 jobs — went into ambulatory health care services. This sector is down by 250,000 jobs (1.5 percent) vis-�-vis February 2020 counts.
Retail trade grew by 29,000 jobs, with 24,000 in food and beverage stores and another 12,000 in general merchandise. As those numbers demand, this was offset somewhat by a loss of 16,000 jobs in building materials and garden supply stores, and another 9,000 loss in health and personal care outlets. Overall, however, this sector is 284,000 higher than February 2020 counts, which makes it the fourth of five positive sectors in this month's report.
Wholesale trade added 22,000 jobs, but remains down by 57,000 jobs (1 percent) from February 2020 levels.
Mining added 9,000 jobs, of which 5,000 was in the area of oil and gas extraction (upstream development). Overall this sector is up by 73,000 from its February 2021 low point. That makes it, at least by my reckoning, the fifth of five positive sectors in this month's report.
Other tracked sectors were mostly flat – namely, construction, information, other services, and government. The total number of sectors tracked thus comes to 13.
Offhand, I'd say the intrinsic news in this month's report is positive, with 5 of 13 sectors in positive territory, and two more within a hair's breadth of braking into that same domain. Then, too, 9 of 13 sectors reported jobs added for the month. And while the 428,000 jobs added number for April is indeed 18-to-19 percent less than the 2021 monthly average, it's still not bad at all.
Explaining the Swing Between Viewpoints
I'm inclined to understand the WSJ's gloomier take on the latest jobs report as a case of "been there, done that, not worried about it anymore" where labor markets are concerned. In other words, the financial take on things is that the job market is no longer a leading indicator in where markets are going.
I think they've concluded that other things — namely inflation, corporate earnings, and the war in Ukraine — are all exerting a powerful drag on the economy and thus, weigh more heavily on futures than do jobs. Obviously, the Post and NPR see things from a different viewpoint, or perhaps they haven't yet factored those other concerns into their overall outlooks as much just yet.
FWIW, I'm finding myself more inclined to agree with the WSJ looking further ahead into 2022. This is not my normal outlook, so I'll explain that a recent story from the May 6 edition of The Economist helps to explain my thinking. Entitled A divergence in consumer surveys adds to recession worries for America it points to varying degrees of consumer confidence and a distinct downward trend in same as potential harbingers of a looming recession.
I think the WSJ is ahead of the other publications in this situation, possibly because they're more attuned to market directions and related indicators. I'm hereby advising readers to buckle up, batten down the hatches, and get ready for some rough sailing in the months ahead. Watch out: it's going to get interesting! Review your investments, and take evasive action as needed.
Hint: I think this may be a good time to back away from index-oriented funds.