April Rebound Tempered by Downward Revisions to March

Economic Pulse
May 8, 2015
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April’s payroll figures were largely in line with expectations—total payrolls rose 223,000 and the unemployment rate fell to a new low of 5.4%—but the aggregate downward revisions to data from the prior two months (a combined 39,000) were disappointing, reinforcing a weak start to the first quarter of the year.

While monthly gains in April office employment (74,000) were in line with historical averages (Table 1 and Chart 1) they still were not strong enough to offset March’s lackluster figures. The average gain for March and April in each of the major office-using segments (Information, Financial Activities and Professional/ Business Services) was lower than the average gain over the prior 12 months, suggesting the possibility that a modest slowdown has begun.

Table 1. Monthly Change in Office-Using Payrolls by Category (000s, SA)

Monthly Change in Office-Using Payrolls by Category (000s, SA) as of April 2015

Chart 1. Office-Using Employment and Total Payrolls, April 2007 – April 2015 (Seasonally-Adjusted, 000s)

Monthly Change in Office-Using Payrolls by Category (000s, SA) as of April 2015

A similar sign of some softening in the jobs numbers is apparent in a chart of total payrolls against a 1-month diffusion index of all 263 industries in the private sector (Chart 2). The diffusion index shows the percentage of industries where employment has increased plus one-half of the industries with unchanged employment. While the index is still above 50 percent (the level where the balance between industries with increasing and decreasing employment is equal), the index has fallen sharply over the past year, and has foreshadowed slowdowns in overall hiring during prior cycles. While it would be premature to read anything into figures from any one month, the diffusion index, in conjunction with a contraction in average weekly hours worked for Professional/Business Services employees to a near two-year low, does not signal the rebound we were hoping for in Q2.

Chart 2. Total Private Payrolls (000s) and 1-Month Total Private Diffusion Index, Lagged 12 Months

Monthly Change in Office-Using Payrolls by Category (000s, SA) as of April 2015