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Happy, just not delirious. The addition of 244,000 jobs is certainly good news, as are the upward payroll revisions for February and March. But as we continue to point out, job recoveries are not smooth - they encounter bumps and bruises along the way, and sometimes the data appears contradictory, whether it's for cause or because of the way it's collected. Which brings us to the jump in the unemployment rate, to 9 percent from 8.8 percent the previous month. The government obtains this number from a separate survey of households. From Real Time Economics:
The household survey is much smaller than the establishment survey, and as a result it can swing around a lot -- and move the unemployment rate up and down when it does. That volatility is a big reason why economists usually, but not always, pay much more attention to the establishment report. In April, the household survey registered a loss of 190,000 jobs, while the labor force -- the number of people working or looking for work, stayed about the same. And so the unemployment rate went up. The household survey also includes workers that don't show up in the establishment survey, like farmers, the self-employed and people who work without pay in the family store. In April, that difference apparently accounted for a lot.
Did the unemployment go up because more people have started looking for work? Apparently not, because the participation rate was unchanged for the month. What the higher jobless rate does suggest is more or less what economists have been saying for months: That this is a very slow, very sluggish jobs recovery that will take not months but years to sort out. I mean, just look at the above chart (via the NYT). Since the downturn began in December 2007, the economy has lost about 5 percent of its nonfarm payroll jobs. Making up for that loss is proving to be very hard. From Calculated Risk:
This is a much better pace of payroll job creation than last year, but the economy still has 6.955 million fewer payroll jobs than at the beginning of the 2007 recession. At this pace, it will take 3 years just to get back to the pre-recession level, or sometime in 2014! Considering the depth of the recession, this remains a sluggish jobs recovery (not unexpected following a financial crisis).
By the way, the larger-than-expected jump in payroll jobs has nothing to do with the April hiring binge by McDonald's. Zero.
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.