Meet the Author

Yoonsoo Lee |

Research Economist

Yoonsoo Lee

Yoonsoo Lee was formerly a research economist in the Research Department. His areas of research include macroeconomics, labor economics, and regional economics.

Meet the Author

Beth Mowry |

Research Assistant

Beth Mowry

Beth Mowry was formerly a research assistant in the Research Department of the Federal Reserve Bank of Cleveland. Her work focuses on labor markets and business cycles.

05.08.08

Economic Trends

The Employment Situation

Yoonsoo Lee and Beth Mowry

The April Employment Report came in better than anticipated, with a total loss of just 20,000 nonfarm jobs from payrolls. Revisions to February and March numbers increased the losses in those months by just 8,000. The unemployment rate edged slightly lower, from 5.1 percent to 5.0 percent over the month.

While this month’s Employment Report paints a less bleak picture than recent months, it is still indicative of a weak labor market in many areas. The goods-producing sector as a whole continued its 13-month decline, losing 110,000 jobs, its largest loss since February 2007. Service-providing industries, however, created 90,000 jobs, an impressive gain compared with March’s very modest 7,000 gain.

Within the goods-producing sector, manufacturing accounted for 46,000 of the payroll losses, and construction accounted for 61,000. Durable goods manufacturing fared far worse than nondurable, losing 43,000 versus just 3,000. Within durables, transportation equipment (-19,000) and fabricated metal products (-11,300) fared the worst. Food manufacturing was the most positive influence on nondurable goods, adding 1,700 jobs.

The largest contributors to gains in the service industry were education and health professions; professional and business services; and leisure and hospitality. Most of the 52,000 job gain in education and health professions came on the health care end (36,900). This is even larger than last month’s gain of 43,000 and represents the sector’s best performance since August of last year. The 39,000 payroll gain in professional and business services pulled the sector out of its three-month-long slump, and was largely due to solid gains in professional and technical services (26,800) and computer systems design (10,200). Leisure and hospitality’s 18,000 gain was led by food services and accommodation (20,000). It is worth noting that financial activities, although a small source of April’s service-industry payroll gains, came in positive for the first time since last July, adding 3,000 jobs.

Retail lost 26,800 jobs in April, continuing its negative trend begun in December. In particular, building materials stores and department stores lost the most jobs within the industry. Food and beverage stores lost jobs (4,400) for the first time since last April. Temporary help services, which is often regarded as a leading indicator of overall employment conditions, lost just 9,300 payrolls, compared to March’s larger loss of 25,000. 

Labor Market Conditions

 
Average monthly change (thousands of employees, NAICS)

2005

2006

2007

YTD 2008

April 2008

Payroll employment

211

175

91

−65

−20

  Goods-producing

32

3

−38

−90

−110

    Construction

35

13

−19

−48

−61

    Heavy and civil engineering

4

3

−1

−9

−15.7

      Residentiala

11

−2

−10

−32

−33.1

      Nonresidentialb

4

7

1

−7

−12.6

    Manufacturing

−7

−14

−22

−44

−6

      Durable goods

2

−4

−16

−33

−43

      Nondurable goods

−8

−10

−6

−11

−3

  Service-providing

179

172

130

25

90

    Retail trade

19

5

6

−26

−26.8

    Financial activitiesc

14

9

−9

−6

3

      PBSd

56

46

26

−16

39

    Temporary help services

17

1

−7

−19

−9.3

    Education and health svcs.

36

39

44

48

52

    Leisure and hospitality

23

32

29

15

18

    Government

14

16

21

13

9

      Local educational services

6

6

5

5

−0.7

       

Average for period (percent)

Civilian unemployment rate

5.1

4.6

4.6

5.0

5.0

a. Includes construction of residential buildings and residential specialty trade contractors.
b. Includes construction of nonresidential buildings and nonresidential specialty trade contractors.
c. Includes the finance, insurance, and real estate sector and the rental and leasing sector.
d. PBS is professional business services (professional, scientific, and technical services, management of companies and enterprises, administrative and support, and waste management and remediation services).
Source: Bureau of Labor Statistics.

The three-month moving average of private sector employment growth inched up from -94,000 in last report to -78,000 in this report. This measure can provide a cleaner read of labor market conditions because it removes some of the monthly volatility and the consistent boost provided by the government. Due to the government’s positive contribution of 9,000 jobs last month, April’s private nonfarm payroll change actually looks less optimistic than the total nonfarm payroll change. Private nonfarm payrolls declined by 29,000 in April. The diffusion index of private employment fell from 48 to 45.4, meaning that even more private employers cut back payrolls in April than in March.