The Employment Report
I am at a conference today, so this is a very quick take on this morning's jobs report. There is some encouraging news. Employers added 290,000 jobs during the month of April, the best showing for job creation in some time. However, the unemployment rate went up to 9.9 percent. How did this happen with such a large increase in the number of jobs? It's because the number of people looking for jobs -- the labor force -- went up even more. This likely reflects renewed optimism about the prospects for employment.
Via email, Larry Mishel of the EPI offers some context:
The rise in unemployment reflects a predictable surge of people entering the labor force as we see the fourth month of positive job growth. Since December the labor force, those working or looking for work, expanded by 1.9 million. However, this only corrects for the comparable decline between May and December of 2009, leaving the labor force no bigger now than in May 2009. In fact, given the 1.6 million growth of the working age population in that period we might have expected the labor force to grow by over 1.0 million (if over 65% of the population is in the labor force). So, we still have a 1.9 million backlog of people (calculated as the decline in the labor force since the start of the recession) we can expect to return to the labor force as job growth continues: this means that we will need to see this continued strong or stronger job growth to get the unemployment rate moving downward.One uncertainty is if the current rate of job growth will continue. In addition, the large backlog of people who would like to find employment is worrisome. Even at the current rate of job growth it will take a considerable amount of time to "work" off the excess.
Since I am short on time, here are a few more reports on the numbers: NY Times, WSJ, FT, Washington Post, Calculated Risk, Free Exchange, Angry Bear, Twenty Cent Paradigms, Paul Krugman.
