Updated: 06-May-08 11:47 ET

April Nonfarm Payrolls

Updated: 06-May-08 11:47 ET

Highlights

• Briefing.com Forecast: 
• Market Consensus: 

Key Factors

• Nonfarm Payrolls:   April decline was much smaller than expected.  There is some talk that the BLS overestimated positions associated with business startups (births) but they simply use a model to make that calculation.  A downward revision to the April number is possible, but this small 20,000 decline nevertheless has to be taken as a good indicator for the economy.
• The 20,000 drop in payrolls amounts to a modest 0.015% decline on the base of 137,838,000 payroll positions.  That is a 0.17% annual rate of decline.  In that light, it is a very small decline and far less than the 150,000 to 250,000 per month declines in payrolls seen in true recessions. 
• Unemployment Rate:   A dip back to 5% as employment as measured in the household survey surged 362,000.  This figure also lends credence to the argument that the April payroll data reflect an improved labor market. 
• Hourly Earnings:   A small 0.1% increase breaks a long string of 0.3% gains and leaves the year-over-year increase at 3.4%, down from 3.6% in March.  It may be that weak economic conditions are leading to slower wage gains.  This would be a positive factor in keeping inflation in check.   
• The decade high for year-over-year earnings was 4.3% yoy in December 2006.
• Average Workweek:   Dipped back to 38.7 from 38.8 in March.  It has been in this range the past half year.  The decline of 0.3 hours in the manufacturing workweek, coupled with the decline of 46,000 in manufacturing employment, suggests that industrial production for April will at least reverse the 0.3% gain of March.
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Big Picture

• Payroll trends are weak, but not as weak as in true recessions.  The average monthly decline in payrolls so far in 2008 is 65,000.  In the 2001 recession, payrolls held up well the first three months, actually increasing by a net 15,000.  In April 2001, however, payrolls plunged 281,000.  That was followed by declines averaging 115,000 per month the next four months.  Payrolls plunged even further after 9/11/2001.  The current trend in payrolls equates to about a 0.6% annual rate of decline.  Given productivity gains, this correlates with modest real GDP growth rather than declines in real GDP.