Today we got the big non-farm employment report. The headline establishment number was pretty good but the household data was actually quite bad. The Labor department takes two surveys for the jobs report. The Establishment data surveys a very large sample of established businesses. The household survey is done with a monthly survey of 60K households. The household survey is used to calculate the unemployment rate. These surveys are generally done in the middle of the month. Here is my take on the details of the jobs report
- The headline establishment survey number was quite good at 244K net jobs created in April and 268K private jobs. This was quite better than the expectations of 185K. I think due to some weaker data lately there were fears for an even weaker number. So the market heaved a big sigh of relief when we got a good number.
- Another positive in the establishment data was that previous numbers were revised up by 46K.
- The employment gains were pretty broad based across many industries which is also a good sign.
- The unemployment rate increased to 9%. The household survey showed a loss of 190K jobs. The household survey is a lot more volatile but still you would not have expected such a large drop. Secondly we were not seeing very large increases in the household survey prior to April, so there was no expectation of some give back. From Feb to April, the household survey just shows a gain of 100K jobs. So this was clearly a negative.
- Another negative was that the hourly earnings increased only by 0.1% vs expectations of 0.2%
- The workweek remained constant at 34.3 hrs.
The jobs report was taken in the middle of the April, whereas we have seen a recent increase in unemployment claims. With the downright bad household survey the jobs report doesn’t alleviate my concern that we may be losing some momentum in the economy. There are many seasonal adjustments made, it is possible the household data was hurt by seasonal adjustments. At this stage my feeling is that this was more of a mixed report than a good one on all fronts.