One should never put too much weight on any one month of employment data. These figures are subject to revision, and further revision.
—Scott J. Brown, PhD, SVP, chief economist, Raymond James Financial
May 7, 2012
The April Employment Report disappointed stock market participants. However, it really wasn’t a bad report. Private-sector job growth has been moderately strong this year. The Household Survey data suggest that the economic expansion has been strong enough to absorb the growth in the working-age population, but not enough to take up much of the labor market slack that was generated during the downturn. These figures tell us nothing about where the labor market is headed. Job growth over the next six months will have important implications for investors and for the November election.
One should never put too much weight on any one month of employment data. These figures are subject to revision, and further revision. However, the recent employment reports have painted a consistent story. This was an unusually mild winter. As a consequence, the December-to-January decline in unadjusted payrolls was lower than usual and the February payroll gain was higher than usual. The seasonal adjustment turned these into outsized gains in January and February. The March and April payroll gains, in turn, were biased lower.
Seasonally adjusted private-sector payrolls averaged a 207,000 monthly gain over the first four months of the year (and a 199,000 average over the last eight months). We’d like to see payrolls rising by 250,000 to 300,000 per month over three or four years to return to full employment, but the recent pace has been respectable. State and local government payrolls fell by 11,000 in April, reflecting continued budget strains, but the pace of job losses is less than in 2011.
