Editor's Note: This report is based on survey data from April 2024 that was published in May 2024. This is the most recent data available. (Source: Bureau of Labor Statistics)
The US job market underperformed expectations for new job creation last month, adding only 175 thousand new jobs relative to the 240 thousand jobs that economists had predicted.
Further, while the unemployment rate increased slightly to 3.9%, the actual month-to-month change was even smaller than it seems and was amplified by the customary rounding of the headline figure to one decimal place.
While we have at many times touted the now 27 consecutive months that the unemployment rate has been below 4%, which represents a historically low rate maintained for a historically long time, a perhaps comparably impressive figure that is emerging is the 9 months in a row that the unemployment rate has rounded to within one-tenth of a percent of 3.8%, which is impressively consistent, a well.
The healthcare industry recorded the largest number of new jobs last month, at 56 thousand, which is down slightly from an average of 63 thousand each of the last 12 months, while the social assistance industry grew by 31 thousand jobs - almost 50% higher than the average 21 thousand social assistance jobs added each month over the last year.
The retail and transportation & warehousing industries both added about 20 thousand jobs, while construction and government payroll entries grew by about 8,500 jobs apiece.
There was no meaningful change in jobs figures across the other major industries last month, including non-farm natural resource extraction industries, manufacturing, wholesale, information, financial services, professional & business services, and other services.
And it may be worth highlighting that while there was no significant change in leisure and hospitality employment figures last month, revisions from previously reported figures indicate that the leisure and hospitality has not yet in fact returned to pre-pandemic employment levels, so that milestone awaits ahead yet contrary to earlier reporting.
The average workweek also decreased by 6 minutes to 34.3 hours per week last month while average hourly pay rose by two-tenths of a percentage point (or 7 cents) to $34.75 per hour. For private-sector non-supervisor employees, hourly pay rose last month by 6 cents per hour, up to $29.83.
Headlines may largely emphasize that job additions didn’t meet expectations, but it is important to consider those expectations in light of the relevant (and relative) context.
Relative to the approximate 220 thousand jobs added each month on average throughout 2023, for example, the jobs numbers recorded last month are a bit down.
Relative to the more than 400 thousand jobs that the US economy added each month in 2022, however, the 175 thousand jobs added last month look a whole lot worse.
Compared to the fewer than average 170 thousand jobs added each month in 2019 before the pandemic set in, however, or the 125 thousand new jobs added to the US economy on average each month for the 80 years before that - then last month’s 175 thousand new jobs starts to look a lot better.
Expectations and outcomes can have a funny relationship like that, which is mirrored in some of the market behavior we’ve seen recently.
When inflation numbers crept up again as of the most recent data, for example, the Federal Reserve not only chose to forego rate cuts at its latest gathering, but Fed leadership also took the opportunity to tamp down much hope for rate cuts at all in 2024, and the markets slumped as a result. Today, on the other hand, when the job additions failed to meet expectations, the markets again surged.
Relativity aside, whether the job market continues to soften over the next couple months remains to be seen, of course, but with job openings currently at their low point over the last 3 years and with no interest rate relief in sight, a continued softening certainly seems more likely than not.
At this point, however, consistency remains the most noteworthy and supportable trend in the data, and it is important to not lose sight of the fact that the job report remains significantly stronger than average, even if fewer jobs were added than expected.
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