Headline April BLS Report Misses Estimates
April was another weak month for the labor market. Despite the strong ADP report, the BLS report only showed 164,000 jobs created as you can see in the chart below. The consensus estimate was for 191,000 jobs created. This caused the unemployment rate to fall 3.9% which was below the estimate of 4%. To be clear, I'm not saying the report was bad only because the headline job growth number missed. I'll review the negative details later in this article. The prior report was revised 32,000 higher to 135,000 and the February report was revised lower by 2,000 to 324,000. It's common to see big numbers revised lower and small numbers revised higher. The updated 3 month average is 208,000 jobs added per month. The latest report could easily be revised closer to the initial consensus estimate. The weather had some impact on the numbers as there were 133,000 people who couldn't go to work because of bad weather. That's double the average which is 76,000.
Earnings Growth
One good part of the report was that 24,000 manufacturing jobs were added which beat estimates for 15,000. It was slightly above last month's increase of 22,000. This is a small part of the economy, but considering the recent deceleration of the sector, it's great to see a number beat estimates. Now let's get into the details of the negative results. As you can see from the bottom chart below, the month over month average hourly earnings growth was 0.1% which missed estimates for 0.2% growth and last month's 0.3% growth. Year over year growth also missed estimates as it came in at 2.6% which was below last month's result and the estimate for 2.7%. We're at the point of the cycle where we should be seeing hourly earnings growth beat estimates rather than miss them. A combination of a low headline number and high earnings growth would be a sign of a tight labor market. Instead the combination we got is consistent with a slowdown. Obviously, one report doesn't mean a recession is coming, but we shouldn't completely ignore these bad numbers.
