Commenting on yesterday's first-quarter productivity report, Brad DeLong pined "Now if we could only get back to more normal rates of employment growth, the future would look bright indeed." At least for now, he got his wish.
Just in case you haven't read it elsewhere, here's the summary on the April employment report, from Reuters:
U.S. employers added a surprisingly large 274,000 jobs in April and payrolls grew in each of the two prior months more than first estimated, the Labor Department said on Friday in a report that eased fears about economic growth.
The April jobs total outstripped analysts' expectations for 170,000 new jobs and implied that interest rates are likely to keep rising since lofty energy prices have not sapped the durability of the three-year old economic expansion.
Further underlining the surge, the government said 93,000 more jobs were created in February and March than it previously reported -- 146,000 in March instead of 110,000 and a whopping 300,000 in February instead of 243,000.
Some more detail, from MarketWatch:
"The data are much stronger than expected all the way around and should put the slowdown scenario under suspicion," wrote analysts for ActionEconomics...
The average workweek increased by two-tenths of an hour to 33.9 hours, the highest since September 2002.
Total hours worked in the economy increased by 0.9%, marking the biggest increase in eight years. The growth in hours worked is equivalent to adding 1.2 million workers to payrolls.
People were clearly impressed. This is from the aforementioned Reuters report...
"So much for soft spots, unless you think it is possible to create 700,000 jobs in the past three months and not have a solid economy," said economist Joel Naroff of Naroff Economic Advisors in Holland, Pennsylvania.
While the folks at Briefing.com are more willing to acknowledge the weakness in recent economic data, they still take the occasion to prompt us for a little perspective:
The economy clearly hit a soft patch in the first quarter and March in particular. Today's data, however, will go a long way to alleviating fears that the slowdown in growth was the start of an even worse trend. GDP growth in 2005 will not match 2004, but this report should remind investors that slower growth does not mean no growth. The economy has strong momentum that higher oil prices and higher interest rates will only cut into, and not end.
In essence, today's report confirms the signs of labor-market firming that were already in yesterday's productivity and initial claims data. From MarketWatch:
Productivity in the American workplace accelerated in the first three months of 2005, rising at a 2.6% annual rate, the Labor Department estimated Thursday.
Unit labor costs - a key measure of inflationary pressures from compensation - increased 2.2% annualized...
Productivity has increased 2.5% in the past four quarters, the smallest year-over-year gain in nearly four years. Unit labor costs have risen 2.5% in the past year, the fastest gain in nearly four years.
Still, the interpretation of the unit labor cost changes was relatively benign:
"The data show a very clear acceleration over the last two quarters, with unit labor costs now matching the increase in core inflation and roughly in line with long-term average increases," said Matthew Martin, an economist for Economy.com. "The 2.2% increase in unit labor costs is more typical of an economy in the midst of expansion and is not itself a significant inflation worry."..,
"Labor costs have gone from a major downward influence on inflation to a roughly neutral (maybe even slightly upward) influence," said Steve Stanley, chief economist for RBS Greenwich Capital. "Not a reason for the Fed to panic and go 50 basis points, but another reason for the building concern among central bankers about inflation risks."
A similar sentiment, from Reuters...
Joel L. Naroff, president of Naroff Economics Advisors in Holland, Pa., said the report suggested just a slow bubbling up of inflation pressures.
"American businesses are doing surprisingly well in controlling their hiring and wages," he said. "While we are seeing a slow, steady increase ... they are not surging."
... and from Bloomberg:
"Unit labor costs are not yet putting significant upward pressure on goods and services inflation, but they are no longer a source of restraint,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. `
A private report this week showed companies were more reluctant to fire workers last month. The number of job cuts announced by employers fell to 57,861 in April, the fewest in almost five years and 20 percent less than in April 2004, according to a survey from Challenger, Gray & Christmas Inc., a Chicago-based job placement firm.
Firings are slowing even as the economy slows. Gross domestic product grew at a 3.1 percent annual pace last quarter, the smallest gain in two years, the Commerce Department reported last week.
... and despite a slight setback in the most recent weekly numbers, the trend in jobless claims is positive. msnMoney, via Reuters:
A four-week moving average of first-time claims, which smooths weekly volatility to provide a clearer view of job-market trends, slipped 2,000 to 321,5000, its lowest level in nearly two months....
"Although the trend in initial claims is difficult to determine, the trend on continuing claims is clearly lower,'' Steven Wood of Insight Economics said in a note to clients.
This comment, from Bloomberg, pretty much sums it up:
The jobs report "makes the market happy,'' said Nathaniel Paull, who helps manage $4.5 billion at New Amsterdam Partners in New York...
Elsewhere in Blogland:
Kash judges the report "pretty good", but worries that construction sector numbers may not hold up. At Business Week's Economics Unbound, however, Michael Mandel focuses on the gains in the information sector. (On the other hand, they are not so sure about that at Info Tech Watch.)
pgl covers the unemployment data, and adds that he is not so impressed with the increase in hours or wages.
Barry Ritholz takes a look at the stock market impact of jobs data.
Calculated Risk has an informative discussion of the Bureau of Labor Statistic's treatment of job creation from estimated firm "births" and "deaths."
The Prudent Investor thinks "these most recent figures will allow the Federal Reserve to stay on its course."
UPDATE:
Calculated Risk has more on seasonal adjustment.
The Capital Spectator says "There's more than just a strong number here. The payroll gain for April raises fresh questions about whether the weaker-than-expected first-quarter GDP report was a fluke", and links to a BusinessWeek Online article containing this quotation from Jay Suskind, head trader at Ryan Beck & Co.: "Now, we're thinking about interest rates, and that puts the Federal Reserve back in play."
LAST UPDATE: The Big Picture has some final (pessimistic) thoughts. Melanie at Just a Bump in the Beltway links to an optimistic-sounding Louis Uchitelle, but like BP is unconvinced.
On the other side of the fence, Pejmanesque links to an AP piece that contains plenty of good cheer:
"The economy appears to be snapping back and the soft patch has probably evaporated," said Lynn Reaser, chief economist at Bank of America Capital Management. "Jobseekers can now look forward to a more receptive climate. We are seeing jobs open up over a wide swath of industries."...
"The U.S. jobs machine has finally shifted into a higher gear and will likely drive strong economic growth through the rest of the year," said Bill Cheney, chief economist at John Hancock Financial Services.
I myself am ever the optimist, but agree it may be just a tad early to be getting too carried away. I can already feel the hammers getting ready on this one:
White House spokesman Scott McClellan, however, credited the president's "pro-growth policies" for the hiring pickup.
The Bloomberg article contained even more good news...