The April employment report is mixed and probably won’t be pulling forward expectations for a Fed rate hike. Nonfarm payroll growth came in about as expected, at a soft 223,000. But there is a substantial downward revision to what was already an extremely weak March, from 126,000 to 85,000. The good news is another downtick in the unemployment rate, to 5.4 percent from 5.5 percent and reflecting a favorable mix led by a rise in those finding jobs.
Details of the payroll data show a very large 45,000 rise in what has been a depressed construction sector. This is one of the largest monthly gains of the recovery and may point to springtime acceleration for construction and new housing. Professional business services added a strong 62,000 jobs with temporary services up a solid 16,000 for its best gain of the year. Gains in this subcomponent often come as employers hire temps to fill in immediate needs, in turn pointing to permanent hiring ahead.
Earnings data are mixed with the monthly reading on average hourly earnings up only 0.1 percent. But the year-on-year rate is over the 2 percent line, at plus 2.2 percent. The Fed’s generally stated inflation goal is 2 percent. This report follows last week’s employment cost index which showed a definite uptick in wage pressures.
Among other details, the participation rate edged higher to 62.8 percent from 62.7 percent in another sign of improvement. One negative sign, at least for the manufacturing sector, is a downtick in manufacturing hours, confirming a run of negative reports out of the sector during April. Manufacturing employment remained dormant for a 3rd month in row, up only 1,000.