Job Growth is Underwhelming, Again

By Toni Vranjes

May 4, 2012

For the second month in a row, the pace of job growth was disappointing, and the unemployment rate dropped for the wrong reason.

Payrolls increased by 115,000 in April, which was about 50,000 less than economists had forecast. The government’s revised figures show that payrolls rose by 154,000 in March. In comparison, the average job growth for the period from December through February was 252,000 per month.

The unemployment rate dropped from 8.2 percent to 8.1 percent — but the rate fell because of a shrinking labor force. In April, the labor force declined by 342,000 people.

One area of job growth was professional and business services, which grew by 62,000. That category includes temporary help services, which added 21,000 jobs.

Job creation also occurred in retail trade, health care, manufacturing, and leisure and hospitality.

Employment dropped in transportation and warehousing, which lost 17,000 jobs, and government, which shed 15,000 jobs.

While much of the employment news was downbeat, not all is bleak. For instance, the Labor Department revised job growth upward for February and March.

Diane Swonk, chief economist at Mesirow Financial, also highlighted the growth in temp jobs in April.

“On the brighter side, we saw temporary employment bounce back, suggesting more permanent hiring on the horizon,” she wrote in a blog post.

She also expects overall job creation to strengthen in the months ahead.

“Much of the ‘weakness’ in the data reflects a give-back to the gains created by unseasonably warm, winter weather and will normalize as we move into May and June,” Swonk wrote.

Nigel Gault, chief U.S. economist at IHS Global Insight, also predicts stronger job growth.

“The employment deceleration in part results from warm winter weather that pulled some hiring forward, producing a payback now,” he wrote in a commentary.

“For that reason we think that the March and April payroll figures understate the pace of recovery, and we look for a better but still subdued pace of job creation in the 150,000-200,000 region over the rest of the year,” Gault added.

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