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Solid Hiring Streak Continues in April Amid Historically Low Unemployment

Solid Hiring Streak Continues in April Amid Historically Low Unemployment

The U.S. economy added more jobs in April than economists predicted as the labor market continues to tighten.

Roughly 428,000 employees were added to payrolls in April 2022, while the unemployment rate was unchanged at 3.6%, according to the Bureau of Labor Statistics (BLS). The volume of new jobs added during the month was above the roughly 380,000 positions forecast by experts. Still, the job count is nearly 1.2 million below the level prior to the pandemic in February 2020, while the unemployment rate is at one of its lowest levels in over 50 years.

Jobs by Industry

 The jobs recovery in April was broad-based, with the service-providing industries adding 340,000 jobs, while the goods-producing industries added 66,000 for the month. Of April’s overall job gains, 42% were in lower-paying sectors such as Trade, Transportation and Utilities (+104,000) and Leisure and Hospitality Services (+78,000), followed by gains in Education and Health Services (+59,000) and Manufacturing (+55,000).

• The Trade, Transportation and Utilities industry added 104,000 jobs in April with the largest portion in transportation and warehousing (+52,000). Retail trade added 29,200 jobs, led by food and beverage stores (+23,800), while building material and garden supply stores recorded a notable downturn (-16,100). Wholesale trade added 22,200 jobs for the month with durable goods accounting for 8,900 positions and nondurable goods adding 8,200 jobs. Utilities was up just 300 jobs for the month. Employment in Trade, Transportation and Utilities is 893,000 jobs above the February 2020 level, led by strong growth in warehousing and storage (+467,000).

• Roughly 56% of the Leisure and Hospitality industry’s monthly gain of 78,000 jobs consisted of positions in food services and drinking places (+43,800) with another 22,300 jobs added in the accommodation subsector. The arts, entertainment and recreation sector added 11,300 jobs for the month, with 13,900 of those in the performing arts and spectator sports subsector. Despite the recent job additions in Leisure and Hospitality Services, employment in this sector is still down by more than 1.4 million workers or 8.5% compared to the pre-pandemic level from February 2020.

• The Education and Health Services industry’s monthly gain of 59,000 jobs was largely in the health care and social assistance sector (+40,900), with much of that gain in health care (+34,300) dominated by ambulatory health care services (+27,900). Meanwhile, the educational services sector added 18,000 jobs in April.

• The Manufacturing industry’s gain of 55,000 jobs in April was fairly split between durable (+31,000) and nondurable (+24,000) goods. Among durable goods, strong gains were recorded in transportation equipment (+13,700) and machinery (+7,400). Job gains in nondurable goods manufacturing were mainly in food manufacturing (+7,900) and plastics and rubber products (+5,700).

• The Professional and Business Services industry gained 41,000 jobs in April with most of those in the professional and technical services sector (+35,800). The lower-paying administrative and waste services sector added 6,300 jobs. The business support services subsector accounted for 5,700 of those jobs, while notable job loss was recorded in employment services (-10,500). As of April, Professional and Business Services had 738,000 more jobs than in February 2020.

• The Financial Activities industry added 35,000 jobs in April with much of that gain coming from the finance and insurance sector (+27,300), with the insurance carriers and related activities subsector gaining 19,700 jobs. The real estate and rental and leasing sector added 7,700 jobs to the total for the month.

• The Government sector added 22,000 jobs in April. Most of that net job gain was in the Local Government sector (+21,000), with the local government education subsector contributing 16,900 jobs. State Government added 7,000 jobs during the month, gains that were primarily offset by 6,000 job cuts in the Federal sector.

• The Information industry added 12,000 jobs in April, with nearly half of those gains in data processing, hosting and related services (+5,300) sector. The Publishing industries, except Internet sector (+4,700) had a solid contribution as well. Motion picture and sound recording industries posted notable job losses (-5,700).

• The Other Services sector added 11,000 jobs in April. The largest contribution to that total was from the membership associations and organizations subsector, which added 5,900 jobs. Personal and laundry services added 3,000 jobs and the repair and maintenance subsector added 2,600 jobs for the month.

• The Mining and Logging industry gained 9,000 jobs in April, with most of that net gain in the oil and gas extraction (+5,100) and support activities for mining (+3,000) subsectors.

• The Construction industry added 2,000 jobs in April, with a gain of 7,400 jobs in construction of buildings – both residential and nonresidential. The nonresidential specialty trade contractors subsector was down 6,400 jobs in April.

Unemployment

The unemployment rate (U3 or headline unemployment rate) remained at 3.6% in April, just 10 basis points (bps) above the lowest level in more than 50 years. As a result, the number of unemployed persons was essentially unchanged at 5.9 million in April. Prior to the COVID-19 pandemic, the February 2020 unemployment rate registered at 3.5%, the lowest level since 1969. The unemployment rate has not fallen below 3% since 1953.

The unemployment rate for adult men increased 10 bps from March to 3.5% in April, while the rate for adult women declined 10 bps month-over-month to 3.2%. The unemployment rate for teenagers rose 20 bps from March to 10.2%.

Across most major industries, unadjusted unemployment rates fell or were essentially unchanged from March to April. The biggest declines were in Transportation and Utilities (down 170 bps to 3.4%), Construction (down 140 bps to 4.6%), Leisure and Hospitality Services (down 110 bps to 4.8%) and Professional and Business Services (down 100 bps to 3.0%). Also recording improved unemployment rates were Wholesale and Retail Trade (down 40 bps to 4.2%) and Education and Health Services (down 30 bps to 2.2%). On the other hand, unemployment rates increased in Mining (up 80 bps to 3.4%) and Information (up 40 bps to 2.7%). All other major industries saw little to no change in unemployment rates from March to April.

The highest industry unemployment rates (not seasonally adjusted) in April were in Leisure and Hospitality Services (4.8%), followed by Construction (4.6%) and Wholesale and Retail Trade (4.2%). The lowest unemployment rates were in the Government (1.5%) and Financial Activities (1.9%) sectors.

The number of unemployed persons that quit or voluntarily left their previous job to begin looking for new employment increased from 787,000 in March to 793,000 in April. The number of unemployed for 27 weeks or longer also increased, from 1.43 million in March to 1.48 million in April. The number of those working part-time that would prefer to work full-time fell by 137,000 from March to about 4.03 million in April, while the number of workers who prefer part-time positions decreased by 44,000 to around 20.8 million.

The U6 unemployment rate, which includes part-timers for economic reasons and marginally attached workers, inched up to 7% in April compared to 6.9% the previous month and 9.9% a year earlier.

Labor Force Participation

The civilian labor force participation rate decreased 20 basis points (bps), moving from 62.4% in March 2022 to 62.2% in April 2022. That recent rate was well below pre-pandemic levels which averaged 63.1% in 2019. The employment-population ratio also backtracked, inching down to 60% in April from 60.1% in March. Both those measures were 120 bps below their February levels.

Workers marginally attached to the labor force increased by about 262,000 from March to 1.62 million in April, while the number of discouraged workers stood at 456,000, up 83,000 month-over-month. Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months.

Average Hourly Earnings

Despite the influx of lower-paying service jobs in April, average hourly earnings rose $0.10 during the month. That monthly increase took average hourly earnings to $31.85 in April, the seventh consecutive month above $31. On an annual basis, average hourly earnings were up $1.65, a 5.5% increase year-over-year. However, wages were outstripped by inflation, as the Consumer Price Index (CPI) rose 8.3% in the year-ending April.

 Industry wage growth varied greatly. Leisure and Hospitality Services wages jumped 11% year-over-year in April, as competition for fewer restaurant and other service workers has had a dramatic effect on wage growth. Transportation and warehousing workers enjoyed a 7.1% annual increase in hourly wages, while Professional and Business Services employees posted a 6.7% year-over-year increase. Most other industries averaged a 4% to 5.5% increases. Meanwhile, Information employees registered a mere 2.6% annual increase.

Telework

The percentage of workers that telework continued to fall in April as more companies are welcoming workers back into the office. April’s teleworking rate of 7.7% was below the 10% rate recorded in March 2022 and well below the 35.4% rate recorded in May 2020, according to the BLS’s supplemental data measuring the effects of the coronavirus pandemic on the labor market. The metric does not include employees who worked from home prior to the pandemic. The rate of teleworking will likely continue to remain elevated compared to historical norms as employers discover that remote working can act as a hiring and retention inducement that boosts employee morale while productivity remains close to previous levels.