Meet the Author

Peter Rupert |

Senior Research Advisor

Peter Rupert

Peter Rupert was formerly senior economic advisor in the Research Department at the Federal Reserve Bank of Cleveland. His areas of specialization include labor economics and applied econometrics.

05.07.07

Economic Trends

The Employment Situation

Peter Rupert and Cara Stepanczuk

Nonfarm payroll employment increased by 88,000 in April, much lower than the first-quarter average monthly gain of 143,000 jobs and the 2006 average monthly gain of 189,000 jobs. In addition, February and March payrolls were revised down –26,000. The report was weaker than the expected 110,000 increase and had the lowest increase since November 2004.

Goods-producing industries continued to soften after last month’s spike, as April’s loss of 28,000 jobs nearly reversed the 36,000 gain in March. The manufacturing sector accounted for most of the decline (–19,000). The construction sector also hurt the headline number by failing to maintain its strength from March: The construction sector lost 11,000 jobs in April after having provided 28.2 percent of March’s job growth (+50,000). Construction payroll growth has been flat since the beginning of the year.

Service-providing industry job growth (+116,000) was subpar, as well, compared to the first-quarter average montly gain (+149,000) and the 2006 average montly gain (+179,000). The payroll numbers are still suffering from the lack of strength in the professional business services sector, which increased only by 24,000 jobs this month. Retail trade and financial activities also put a damper on the report by losing 28,000 and 11,000 jobs, respectively. The financial activities sector experienced its weakest growth in over two years.

The driver for job growth this month was education and health services, with an increase of 53,000 jobs that accounted for almost half of the growth in the service sector. The government sector helped pick up some of the slack, adding 25,000 jobs.

Labor Market Conditions

        Average monthly change
(thousands of employees, NAICS)
  2004 2005 2006 Jan-Mar 2007 Apr 2007
Payroll employment
172
212
189
143
88
  Goods-producing
28
32
9
–17
–28
    Construction
26
35
11
2
–11
    Manufacturing
0
–7
–7
–12
–19
      Durable goods
8
2
0
–14
–13
      Nondurable goods
–9
–9
–6
2
–6
  Service-providing
144
180
179
149
116
    Retail Trade
16
19
–3
25
–26
    Financial activitiesa
8
14
16
3
–11
    PBSb
38
57
42
18
24
      Temporary help services
11
18
–1
–4
-6
    Education and health services
33
36
41
41
53
Leisure and Hospitality
25
23
38
24
22
  Government
14
14
20
27
25
                 
  Average for period (percent)
Civilian unemployment rate
5.5
5.1
4.6
4.5
4.5

a.Financial activities include the finance, insurance, and real estate sector and the rental and leasing sector.
b. 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: U.S. Department of Labor, Bureau of Labor Statistics.

Average hourly earnings slowed, and the 0.2 percent increase in the series was the lowest monthly change since the beginning of the year. Earnings were up 3.7 percent from 12 months ago, but down from March’s 4.0 percent rate. Private service-providing industries influenced the easing of wage pressures more than goods-producing industries this month, but the two have varied widely since the beginning of 2006. Employees earn an average $17.25 per hour.

Real average nonfarm earnings—both weekly and hourly rates—have moderated, as well. However, the dollars per hour and per week remain high relative to recent trends. In real terms, nonfarm employees earn an average $8.32 per hour and $281.92 per week (1982 dollars).