The private sector added 213,000 jobs in April, delivering a hefty gain after a disturbingly soft rise in March, the Labor Department reports. Indeed, the government’s revised data for March shows that US companies increased payrolls by only 94,000, substantially less than the initial estimate of a 129,000 rise. The main takeaway, however, is obvious: job creation picked up dramatically last month. The news suggests that the sharp slowdown in March was an anomaly. As for deciding whether the economy is again headed for a period of modest growth or something stronger, today’s data still leaves room for debate.
On a monthly basis, the April pop certainly helps tone down the fear that the macro trend is stumbling. That’s been the message in the weekly jobless claims report through April—new filings remain close to a 15-year low—and today’s report strengthens the upbeat view.
But while it’s easier to argue that the labor market remains on a course of moderate growth, today’s release also shows that the year-over-year change continues to decelerate.
Even with last month’s snap-back, private-sector payrolls increased a bit less in April in annual terms vs. the previous month: 2.5% last month vs. the year-earlier level. That’s a healthy pace, but it represents the second straight month of lesser annual growth. For the moment, the downshift is mild and it could easily turn out to be noise. The main puzzle for now is whether the deceleration rolls on.
“The pace of employment is quite encouraging,” advises Gregory Daco, head of U.S. macroeconomics at Oxford Economics USA. “Wage growth is accelerating, but it’s quite gradual, more gradual than we would expect in a market where the unemployment rate is 5.4 percent.”
“Gradual” isn’t a particularly novel term at this late date when it comes to reviewing labor market data. Rather, the key question is simply: Is the much-celebrated view of late-2014/early 2015 that anticipated accelerating economic growth still relevant? Or has another preliminary phase of stronger growth hit the wall once more? It’s going to take another few months of data releases to know for sure.
As for today’s update, it’s clear that the labor market is stronger than it appeared from the vantage of the March profile. Deciding if the macro trend is destined to regain its former luster of late-2014, however, remains an open question.
But that’s an issue for next week and beyond. For today, it’s all about dodging a bullet. “What matters most about this employment report is that the winter slowdown did not bleed through into April,” notes Dan Greenhaus, BTIG’s chief strategist.