The April employment numbers show positive news for the labor force in almost every sector.
The unemployment rate of 4.4 percent, down from 4.5 percent in March, is the lowest it’s been in the past 10 years, and 211,000 jobs were added in April after a relatively stagnant March with only 79,000 new jobs.
For those in the workforce, the news that wages are growing by 2.5 percent can only be interpreted as positive. Even though the labor participation rate remained relatively flat — the rate in April was down to 62.9 percent from 63 percent in March, we have seen growth of about two million people over the age of 16 who have jobs over last year.
The U.S. has a service economy, and this report shows more than proportionate growth in the service sector (173,000) compared to the goods-producing sector (21,000).
We’re seeing growth in almost all the major areas of employment — health care (up 19,500 jobs), manufacturing (just up 6,000), finance and insurance (19,000 jobs, mostly in insurance), education (3,000 in the private sector and 8,200 in local government), leisure and hospitality (55,000), social assistance (17,300) and even retail (6,300), which had been down for two consecutive months.
The only area with fewer jobs was the federal government, which lost 6,000 workers, 5,800 from the U.S. Postal Service where there are losses through attrition. Local governments added 23,000 jobs.
There is no doubt that the April report is good news for President Trump and his administration. It is also makes it a near certainty that the Fed will raise interest rates at its next meeting, which is indicative of its confidence in continued strengthening of the economy. The stock market has not responded strongly, since a very good report with 190,000 net new jobs was expected.
The administration and Republicans in Congress have dedicated themselves to reversing the regulations put in place during the Obama administration and have indicated that there will be an attempt to lower taxes, especially those taxes affecting corporations, all of which is adding to confidence and the willingness of companies to hire. There is still room for the labor market to improve. This could lead to more employment in the short run if abut in the long run.
While the labor market has shown improvement, the economy overall is still sluggish, with labor productivity down, employment costs up and gross domestic product growing at an anemic 0.7-percent annualized rate in the first quarter.
What we’re looking for, ultimately, is sustained genuine growth in the economy that lasts more than a quarter or two. We are beginning to see that, based on the numbers released today, but it is too soon to make a judgement on whether the U.S. economy will see expansion for long periods going forward.
Amy Schmidt, Ph.D., is an economist and associate professor of economics and business at Saint Anselm College in Manchester, New Hampshire, home of the NH Institute of Politics.
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