The Bureau of Labor Statistics (BLS) reported that there were 175,000 jobs created in April, which was well below estimates of 243,000 new jobs. Revisions to February and March shaved 22,000 jobs from those months combined. The unemployment rate rose from 3.8% to 3.9%.
What’s the bottom line? The headline job number comes from the report’s Business Survey, which is based predominantly on modeling and estimations. In fact, one of the biggest reasons we saw job gains last month was the birth/death model, where the BLS estimates new business creation relative to closed businesses and how many jobs this created. In April, this modeling added 363,000 jobs to the headline figure, which would have shown a loss of 188,000 jobs otherwise. Average weekly hours also declined slightly, which is important because one of the ways businesses cut costs is to cut the number of hours worked. This caused average weekly earnings, which is a good reflection of take-home pay, to fall 0.1% from March. Overall, the data suggests softening in the labor sector. Again, this could pressure the Fed to cut rates sooner if this trend continues.