America’s nonfarm employers added 175,000 new employees last month. That’s a 42% drop from March’s much stronger 303,000 figure, and 27% below economists’ overall expectations of 240,000.
Unemployment was up slightly, from 3.8% to 3.9%. That rate continues a streak of two years and three months in which unemployment remained below 4%. The last two times unemployment remained below 4% for so long was between 1967 and 1970, and 1951 and 1953, when the post-World-War-II economy was taking off.
As in last month, job growth was strongest in only a few sectors. Health care topped the list as it has in the past recently. Next in the ranks were in social assistance and in the transportation and warehousing parts of the economy.
Analysis by Business Category
Thanks to strong growth of 33,000 net new hires once again in ambulatory health care services subsegment, plus 14,000 in hospitals, and 9,000 in nursing and residential care, the health care industry added 56,000 positions last month. While strong relative to all other areas, that is mostly consistent with previous average hiring rates of 63,000 for this area over the last twelve months.
Number two on the list was in social assistance, another area which has remained strong as the overall job market has cooled. Buoyed by a jump of 23,000 new jobs in individual and family services, it rose overall by 31,000 adds since March. Social assistance hiring averaged 21,000 jobs per month since last April.
Third was transportation and warehousing, with 23,000 new employees. While that number represents a solid gain for this area, even in this category the main areas of shipping and large cargo movement did not add much. It was instead the 8,000-person growth in the couriers and messengers businesses, followed by another 8,000 in warehousing and storage which kept this area alive.
Government jobs rose a little in April, with a total of 8,000 new people brought onto payrolls. The bigger news about this segment was that the surge last month of 51,000 local government jobs filled for March appears to have been a “one-off” event. Average hiring over the last year for the entire government category was 55,000 per month. With this being an election year and signs of recession increasing, economists are predicting at best highly conservative hiring in this segment until election season is over. Last month the government sector as a whole added a whopping 71,000 new positions.
The retail trade part of the economy continued to demonstrate solid gains, reflecting business’ belief that consumers will continue to spend even if the economy is cutting back somewhat and overall consumer debt is rising. Total jobs in retail trade were up by 20,000 in April, well above the previous twelve-month average of 7,000 new positions a month. Hiring was strongest for general merchandise retailers (+10,000), building materials and garden equipment and supplies dealers (up 7,000), and health and personal care retailers (+5,000). Electronics and appliance retailers lost 3,000 employees last month.
Construction employment, an area which is being watched closely as a leading economic indicator because it represents corporate bets on the longer-term economy, remained mostly flat for the month. Considering that average growth for this category was 22,000 jobs per month, that does suggest long-term investments of this kind may be leveling out. Construction auction results suggest the same lack of growth.
Except for these five areas, all other major parts of the economy remained mostly unchanged last month. Those categories included financial activities (including banking and insurance, for example); information services; leisure and hospitality; manufacturing, mining, quarrying, and oil and gas extraction; the catch-call category of other services; professional and business services; and wholesale trade.
Average hourly earnings for all employees rose by 7 cents to $34.75. Hourly wages are up by a net 3.9% for the period from May 2023 through April 2024.
Commentary
Of note in these figures is that unemployment bumped up only by 0.1 percentage points for the month. That it was a tiny increase shows that even the relatively small job growth is enough to present a significant surge in the number of people newly out on the street and looking for work. But since many of those looking for work do not immediately file for unemployment, and others find part-time roles or others at significantly lower pay than what they had been making, the claim by some economists that the current job growth rate is more than sufficient to keep the economy growing still needs to play out.
But other factors are more concerning.
The leisure and hospitality industry, for example, which jumped by 49,000 new hires in March and accumulated an average of 37,000 new employees each month, fell to just flat growth after a long-term surge even as total job growth was easing more gradually for other areas. With the summer travel season approaching, and with this often being a time when families head out for meals outside the home and day excursions, the slowing in hires for this area could indicate consumers are monitoring more of their discretionary spending than in past months, something the businesses in this sector would have insight to in advance. Record high fuel prices will certainly curb summer travel for many.
As noted, construction activities also fell flat for the month. While a complex issue to unpack easily, this indicator could mean businesses have either postponed or cancelled outright long-term expansion plans for their areas, ones which would have required more facilities. It also could mean more generally that the real estate industry is suffering more from dealing with relatively high lending rates for such a long time.
Lower rates of hiring in the primary parts of transportation and warehousing related to the shipment of goods can also be an indicator that overall business-to-business trade is slowing.
Overall hiring was also substantially down in April, making this the single lowest monthly jobs increase since October. It is also way down from the average monthly gains of 242,000 new people hired every month since last May.
This lower overall employment gain also must be mapped against two other economic trends which only became apparent in the last few weeks.
On April 30, The Conference Board Consumer Confidence Index® (CCI), a measure of how consumers feel about their own specific economic situation and willingness to spend money, came in with new figures showing overall consumer sentiment had dropped to its lowest value since June 2022. Short-term opinions of the economy were still strong, a consideration which is consistent with the slow-but-steady increase in retail trade jobs, especially in general merchandising, last month. But long-term opinions of everything from job stability to available discretionary family income were down substantially when people estimated their ability to spend money as easily six months ahead.
The other shock came when the Bureau of Economic Analysis revealed on April 25 that quarterly growth of the U.S. Gross Domestic Product fell from 3.4% in Q4 2023 to just 1.6% in Q1 2024. The same BEA analysis set off other alarm bells with data such as that consumer debt has grown by 22% versus just two years ago. That, compounded by higher credit card lending rates which comprise the lion’s share of that debt, means consumers are seeing real declines in the discretionary income which drives about 70% of the GDP.
The Federal Reserve Board’s decision to keep prime bank lending rates flat this month, rather than lowering them as some might have expected, will also add to the fiscal pressures consumers and businesses alike are going to be facing as the summer quarter approaches.