Friday, May 2, 2014

Jobs Growth Fastest in Over Two Years in April as Unemployment Falls to 6.3%

The economy added 288,000 in April and the unemployment rate dropped to 6.3%, according to the U.S. Bureau of Labor Statistics. April’s pace of growth is the fastest since January 2012. The economy is now just 113,000 jobs away from recovering all of the jobs that were lost during the recession. April’s report also included positive revisions to February and March, adding a combined 36,000 jobs.

The private sector, particularly the services industry, continues to drive job growth. The services sector alone added 220,000 jobs, up from the revised 173,000 the month prior. The goods producing sector added an additional 53,000 jobs. Construction saw large gains as well, adding 32,000 jobs. Government employment increased by 15,000 jobs, driven by the local and state governments. The federal government contracted by 3,000 jobs, a trend that is likely to continue as the federal government cuts its budget and shrinks in size.

The unemployment rate dropped to 6.3%, a 0.4% decline from the month prior. However, the labor force participation rate shrank to 62.8% from 63.2%, and much of the drop in unemployment is due to people leaving the labor force. Notably, the labor force shrank in April by 806,000 people.

During the recession the economy lost 8.7 million jobs, of which it has recovered all but 113,000. Although the U.S. may have regained most of the jobs, the numbers are not comparable because the job gains do not include population growth. When accounted for, it would take until roughly the end of this year to recover all jobs lost during the recession. Moreover, the jobs lost during the recession have higher salaries then the ones created post-recession, lowering the median wage and hourly earnings.

The strong jobs report raises the question if the Federal Reserve will taper at a more aggressive pace at the next meeting.

Read the BLS report.

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