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Patrick J. O’Keefe Shares Expectations for May 2013 Labor Report


by Patrick J. O'Keefe, Director of Economic Research

6/6/13

On Friday, June 7, the Bureau of Labor Statistics (BLS) will release data on labor market conditions in the United States during the month of May.

  • We expect the report to show that employment rose again in May; but that unemployment and other measures of labor force utilization remained relatively flat.
  • Specifically, we expect BLS to report a net gain of 180,000 nonfarm jobs, due to an increase of 195,000 private sector positions and a loss of 15,000 government jobs. We also anticipate that routine revisions will add 10,000 private jobs to the previous estimates of March and April employment.
  • We are looking for BLS to report that, despite May’s modest improvements in the number of jobseekers and jobholders, the unemployment rate was unchanged at 7.5% -- the lowest reading since the end of 2008.

View a chartbook displaying the most recent data on key labor market indicators.

Background - Employment [Charts 1 - 28]:

  • In April, total nonfarm employment rose for the 31st consecutive month, reaching the highest level since October 2008. 
  • April’s month-on-month rise (165,000 net new jobs) was almost one-fifth larger (19.6%) than March’s upwardly revised gain and substantially greater than last April’s increment (112,000). 
  • In the 5 months since December, the three-month average gain in private employment (which smoothes monthly gyrations) has exceeded 200,000 net new jobs. This has occurred only twice since 2000 (mid-2005 and November 2011 through March 2012). Absent a net gain of 270,000 private sector jobs in May (including revisions to prior months), the string will end.
  • Total nonfarm employment has recovered more than two-thirds (70.6%) of the 8.7 million jobs lost during the recession. April’s jobs count was 6.2 million above the jobs contraction’s nadir (February 2010), but still 2.6 million (-1.9%) below the recession’s start (December 2007). 
  • April’s gains occurred entirely in the private sector, where employment increased for the 38th consecutive month. Public sector employment, on the other hand, fell for the 8th time in the past year. (The bulk of April’s 7,000 drop in public jobs occurred among Federal agencies; state and local governments experienced marginal declines.) 
  • Within the private sector, employment in the goods producing industries slipped a bit as the nonresidential construction and extraction industries lost jobs while manufacturing employment was unchanged.
  • Among private service providers, on the other hand, there was broad but uneven jobs growth in April. Solid increases in some industries (viz., dining/drinking, temporary help and retail accounted for more than half the service sector’s increment) were augmented by smaller gains elsewhere.  Declines were both limited and marginal (e.g., 0.3% in information services).

Background - Labor Force [Charts 29 - 40]: 

  • The employment data discussed above is collected from a survey of employers; a separate survey of households obtains data regarding the labor market status of work-age residents. To be counted as a labor force participant, an individual must be a non-institutionalized civilian,16 years or older, and either a jobholder or jobseeker (i.e., having actively looked for work during the prior month). 
  • Labor force conditions generally improved in April, if only modestly. 
  • The number of jobseekers declined slightly (-0.7%).  Yet despite that drop being well below each of the two preceding months, the unemployment rate fell for a third month.
  • Jobholding rose in April by the largest number (293,000) since October, more than fully reversing March’s decline. With smaller numbers of long-term unemployed and discouraged jobseekers, April’s only blemish was an increase in underemployment (i.e., involuntary part-time workers).
  • The increase in jobholding led to a marginal rise in the employment rate (i.e., jobholders as a percent of the work-age population), the broadest measure of utilization of the nation’s human resources. The rate rose marginally (up 0.1% to 58.6%) but remained below 59% for the 44th consecutive month, the longest streak below that threshold since 1979.
  • During 2007, the year prior to the recession, the employment rate averaged 63.0%. Since falling below 59% in September 2009, it has averaged 58.5%.
  • At the pre-recession (viz., 2007) employment rate, April would have had 10.9 million more jobholders than was actually the case.
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