Jobs -> Moderating pace but things are hot
Job gains in April beat expectations, with both of the previous two months gaining 428k jobs. Gains in February were revised down. There are now roughly 1.2 million fewer jobs now than before the pandemic as the recovery in the labor market continues steadily.
On a non-seasonally adjusted basis, the net number of payrolls added in April is close to the pre-covid average of the last ten Aprils. On a seasonally adjusted basis, April job gains were also above average based on longer-term history, and appear consistent with the steady trend of seasonally adjusted job gains in 2021 and 2022.
The unemployment rate remained steady at 3.6%. Labor force participation, employment-to-population ratios, and rates of underemployment weakened in April relative to March, but their levels remain strong compared to last year.
| Oct-21 | Nov-21 | Dec-21 | Jan-22 | Feb-22 | Mar-22 | Apr-22 | |
|---|---|---|---|---|---|---|---|
| NFP growth, k | 677 | 647 | 588 | 504 | 714 | 428 | 428 |
| UR, % | 4.6 | 4.2 | 3.9 | 4 | 3.8 | 3.6 | 3.6 |
| Prime-age UR, % | 4.1 | 3.7 | 3.5 | 3.5 | 3.3 | 3 | 3 |
| U6, % | 8.2 | 7.7 | 7.3 | 7.1 | 7.2 | 6.9 | 7 |
| LFPR, % | 61.7 | 61.9 | 61.9 | 62.2 | 62.3 | 62.4 | 62.2 |
| Prime-age LFPR, % | 81.7 | 81.9 | 81.9 | 82 | 82.2 | 82.5 | 82.4 |
| EPOP, % | 58.9 | 59.3 | 59.5 | 59.7 | 59.9 | 60.1 | 60 |
| Prime-age EPOP, % | 78.3 | 78.8 | 79 | 79.1 | 79.5 | 80 | 79.9 |
| PTER, % of payrolls | 2.9 | 2.7 | 2.5 | 2.4 | 2.6 | 2.6 | 2.6 |
| Long-term UR, % | 1.4 | 1.4 | 1.2 | 1 | 1 | 0.9 | 0.9 |
| AHE, % m/m | 0.6 | 0.4 | 0.5 | 0.6 | 0.1 | 0.5 | 0.3 |
| AHE, % y/y | 5.4 | 5.3 | 4.9 | 5.4 | 5.2 | 5.6 | 5.5 |
| Source: BLS, @benbakkum. |
Transportation and warehousing as well as professional service jobs continue to stand out as industries where employment is growing at a strong pace, even though they’re already well above pre-pandemic levels of employment. Retail jobs have now surpassed pre-pandemic levels as well.
The chart below shows the strong pace of this recovery relative to other recessions. It’s striking how much of straight line the recovery has maintained over the last year. The labor market is 1.2 million jobs away from its pre-pandemic peak.
If the average job growth of the last three months continues at the same pace, the total number of jobs would fully recover to where it would have likely ended up had the pandemic not occurred by late 2023. In many ways that would be an even tighter labor market than before the pandemic as the population has aged and a large number of workers have retired in the intervening period.
An aggregate measure of labor market conditions, the Blanchflower-Levin employment gap, shows that there is essentially no more slack left in the labor market. It’s important to note however, that the participation gap shown here is based on the overall participation rate.
Note: the unemployment gap is the difference between the unemployment rate and an estimate of the non-accelerating inflation rate of unemployment (NAIRU). The participation gap is the difference between the labor force participation rate (LFPR) and the CBO’s estimate of the potential LFPR. The underemployment gap is the difference between the number of employees working part-time for economic reasons as a percentage of the labor force, adjusted for the difference in the average number of hours worked by part-time and full-time employees, and the 1994-2007 average of this calculation.
