The BLS beats the street again vs expectations of 130,000 jobs.
Initial Thoughts
Assuming one believes the data, we have a huge surge in employment starting December of 2024 as data from ADP weakens.
Part of this could be Trump euphoria and part is annual benchmark revisions that that added jobs and employment in one big bang instead of adjusting the charts month-by-month.
Private education and health services added 70,000 of the 177,000 jobs. Transportation and warehousing added 29,000 jobs, possibly related to tariff front-running.
Job Report Details
- Nonfarm Payroll: +177,000 to 159,517,000 – Establishment Survey
- Civilian Non-institutional Population: +174,000 to 273,197,000
- Civilian Labor Force: +518,000 to 171,109,000 – Household Survey
- Participation Rate: +0.1 to 62.6% – Household Survey
- Employment: +436,000 to 163,944,000 – Household Survey
- Unemployment: +82,000 to 7,165,000 – Household Survey
- Baseline Unemployment Rate: +0.0 to 4.2% – Household Survey
- Not in Labor Force: -343,000 to 102,088,000 – Household Survey
- U-6 unemployment: -0.1 to 7.8% – Household Survey
Nonfarm Payrolls Change by Sector
Private Education and Health Services
Employment in health care increased by 51,000 in April, similar to its prior 12-month
average monthly gain of 52,000. Over the month, job growth occurred in hospitals (+22,000) and ambulatory health care services (+21,000). Social assistance continued to trend up (+8,000), but at a slower pace than the average monthly gain over the prior 12 months (+20,000).
Monthly Change in Nonfarm Payrolls
Monthly Revisions
- The change in total nonfarm payroll employment for February was revised down by 15,000, from +117,000 to +102,000.
- The change for March was revised down by 43,000, from +228,000 to +185,000.
- With these revisions, employment in February and March combined is 58,000 lower than previously reported.
Part-Time Jobs
- Involuntary Part-Time Work: -90,000 to 4,690,000
- Voluntary Part-Time Work: +98,000 to 22,723,000
- Total Full-Time Work: +305,000 to 135,440,000
- Total Part-Time Work: +56,000 to 28,523,000
- Multiple Job Holders: -76,000 to 8,860,000
The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.
Note that multiple job holders add to nonfarm payrolls but not the number of employed.
Hours and Wages
This data is frequently revised.
- Average weekly hours of all private employees was flat at 34.3 hours.
- Average weekly hours of all private service-providing employees was flat at 33.2 hours.
- Average weekly hours of manufacturers was down 0.2 hours to 40.0 hours.
An overall decline or rise of a tenth of an hour does not sound line much, but with employment over 160 million, it’s more significant than it appears at first glance.
Hourly Earnings
This data is also frequently revised. Here are the numbers as reported this month.
Average Hourly Earnings of All Nonfarm Workersrose $0.06 to $36.06. A year ago the average wage was $34.75. That’s a gain of 3.8%.
Average hourly earnings of Production and Nonsupervisory Workers rose $0.10 to $31.06. A year ago the average wage was $29.85. That’s a gain of 4.1%.
Unemployment Rate
The unemployment rate hit 4.2 percent in July of 2024 and has not moved higher in 9 months.
Reasons Why the Unemployment Rate Will Rise
- DOGE Government Firings
- Massive tariff and trade distortions
- General business slowing even before the above distortions
Alternative Measures of Unemployment
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
- The official unemployment rate is 4.2 percent.
- U-6 is much higher at 7.8 percent.
Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Some of those dropping out of the labor force retired because they wanted to retire. Some dropped out over Covid fears and never returned. Still others took advantage of a strong stock market and retired early.
The rest is disability fraud, forced retirement (need for Social Security income), and discouraged workers.
Birth Death Model
Starting January 2014, I dropped the Birth/Death Model charts from this report.
The birth-death model pertains to the birth and death of corporations not individuals except by implication.
For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid.
Birth-Death Methodology Explained
I gave a detailed explanation of the model and why the hype is wrong in my June 8, 2024 post How Much Did the BLS Birth-Death Adjustment Pad the May Jobs Report?
I repeat, do not subtract the birth-death number from the headline number. That’s flawed.
Household Survey vs. Payroll Survey
- The payroll survey (sometimes called the establishment survey) is the headline jobs number. It is based on employer reporting.
- The household survey is a phone survey conducted by the BLS. It measures employment, unemployment and other factors.
If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.
Looking for job openings on Jooble or Monster or in the want ads does not count as “looking for a job”. You need an actual interview or send out a resume.
These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.
The BLS payroll reports smack of oversampling large employers and undersampling small employers where jobs have been trending lower.
Final Thoughts
Despite all the work I put into these reports, all of the BLS monthly data is total garbage.
I do the best with BLS data that I can, or anyone can.
The quarterly QCEW and Business Employment (BED)reports represent a 96 percent sample. But those reports lag by about 5 months.
The QCEW reports have been hugely negative and there is every reason to believe QCEW trends will continue.
Related Posts
February 7, 2025: Huge BLS Benchmark Revisions Remove 610,000 Jobs From 2024
Every February the BLS does annual benchmark revisions for the prior year. This year there were huge revisions.
The first link above on BED is a key item.
The Birth-Death model that feeds the monthly jobs report is bogus. It has been screwed up since Covid, first underreporting jobs then overreporting them.
ADP Employment Report Much Weaker than Expect, Large Employment Stalls
On Wednesday, I noted ADP Employment Report Much Weaker than Expect, Large Employment Stalls
Economists expected 125,000 jobs. ADP reported 62,000 with negative revisions.
This is the 4th time in 5 months the BLS was much higher than ADP.
geezers retiring……having more hospital visits…….is boom time for younger service providers…….for another generation.
I think Mr. Market is overlooking that the survey period for the “April” unemployment report was the pay period (or week) that includes April 12.
That’s before the full reaction to the proposed tariffs.
The employment strength is encouraging, especially the Household Survey.
But the April strength could have been driven by the pre-tariff front-running, and not be reflective of the post-tariff demand drop.
The BLS Household Survey was not intended to give an accurate picture of actual jobs gained, just ratios such as the unemployment rate (they only poll like 60,000 households). This survey is quite volatile.
But yes, if the Household Survey was real, +436,000 more employment is a huge number.
Something to keep an eye on over the next few months is construction. If (a big if) there is a movement to reshore things in America one would expect to see construction jobs rising (and they did this month). We know already there have been commitments to build chip plants etc so this could keep the jobs report looking good.
The other thing is that if illegals really are being deported (or being hired illegally less) then one would also expect to see good jobs reports going forward since those jobs would now have to be filled by American workers (ZeroHedge is claiming this today in a headline).
Thanks for doing what you can Mish. Its still very helpful.
Just as corporations use layoffs to distract investors from larger business slowdowns, government worker layoffs will be a distraction from corporate layoffs in the coming months.
Wage pressure continues to moderate.
Companies have not shut down or there would not be hiring. They instead will take one to the bottom line short term as economy adjusts to a new reality.
Factory orders at 4.3% is a positive for return to low inflationary domestic growth.
Fed policy remains too tight given the overall outlook. Economy continues better then market expected.
Economy is not going off that Cliff which doom and gloomers has priced in.
YoY wage growth of 4% is not very “moderate” – and is above the general inflation rate. That points to longer-term inflation issues more likely.
And if the economy (and jobs) are better than the market expected, that points to a tighter economy. So the Fed will more likely stay pat if jobs continue at that rate, not loosen rates which would make the economy even tighter.
“Part of this could be Trump euphoria…”
Trump said just a few days ago that the economy still has Biden overhang so Trump gets zero credit for the jobs report.
BS!