by: Cliff Waldman, Chief Economist
If you were worried about a U.S. economic stall because of the weak first quarter GDP report, you should find some relief in the April jobs data. While the March payroll jobs number remains well below trend, there were 211,000 net payroll jobs added in April, consistent with the healthy gains seen in January and February. Supporting the picture of positive labor market momentum, the drop of 698,000 people working part-time for economic reasons is a sign of broad strengthening which may help the low labor force participation rate.
The sector-specific jobs numbers draw a picture of routs finished and routs started. With the 6,000 new factory-sector jobs in April, manufacturing employment has now increased for five consecutive months, with an average of 14,200 new jobs gained per month. This is an impressive turnaround from a particularly weak period. Overall, this is the most convincing evidence that the broad manufacturing picture is starting to show some real improvement from years of weakness. Modestly stronger global growth goes a long way for the U.S. manufacturing sector.
However, significant change is always a fact of economic advancement. The rout in the retail sector, born of long simmering forces gravitating retail trade toward a new supply and sales model, is a risk for the overall employment picture. Happily, things calmed in April as retail added 6,300 jobs, but this was after employment losses totaling 56,000 in February and March. Forecasters need to keep an eye on this ongoing story.
The gap between weak GDP and relatively strong jobs is, of course, due to the productivity problem. The report for the first quarter of 2017 was awful-showing an actual drop in productivity. This is an actual worldwide problem (not a data issue), and it needs attention if U.S. economic growth is ever going to exceed 2%. Down the road, persistently weak productivity performance will adversely affect economic growth, profits, the quality of jobs created, and wages.
For now, the U.S. jobs picture remains fundamentally positive in spite of a low participation rate, as the memory of difficult years clearly begins to fade.