Office-Using Employment for April Surges Ahead; Unemployment Rate Decline Looks to be Aberration

Economic Pulse
May 2, 2014
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Payrolls surged by a robust +288,000 and positive revisions to the prior two months increased February and March figures by a total of +36,000. Increases in the private sector were spread across retail trade (+35,000), food services and drinking places (+33,000), construction (+32,000), and health care (+19,000); government payrolls advanced by +15,000, led by local government as the count of federal government workers continued to decline. (The count of federal employees now stands at the lowest level since 1966.)

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The +78,000 gain in total office-using employment (Table 1 and Chart 1) was almost entirely due to increases in Professional/Business Services workers, with 1/3 of the gain due to a rise in the number of temporary help services employees (although the category’s advance was also aided by a nearly +12,000 increase in the count of workers in management of companies and enterprises and a nearly +9,000 increase in computer systems design workers.)

Jobs in the Financial Activities sector continued to be lackluster, rising by +6,000, as losses in finance were offset by a modest increase in real estate and rental and leasing service employment (+8,100) and insurance (+3,600). Similarly disappointing was the contraction in the tally of Information sector employees, whose ranks declined by -3,000 on the back of a -7,300 decline in motion picture/sound recording workers.

While the -0.4 percentage point drop in the unemployment rate from 6.7% to a 5 ½–year low of 6.3% was welcome news, the Household Survey, from which the unemployment rate is estimated, shows that the decline was largely due to a sizable drop of -0.5% in the labor force. (Since 2000, there have been only two other months where the labor force has dropped as much.) The Bureau of Labor Statistics specifically commented that the decline in the “April labor force decline was due mostly to fewer people entering the labor force than usual, rather than to more people exiting the labor force.” As shown on Chart 2 above, a rebound in the number of new entrants and re-entrants to the workforce could portend a subsequent acceleration in the unemployment rate, particularly since these two segments of the population tend to have less experience and potentially stale skill sets, making finding a job that much more difficult.

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