Further Considerations On The Disappointing April Jobs Report. Consider The Averages

I’ve been threatening for a couple of weeks to run some extended comments on the big miss in the April jobs report. As there’s no economic news of note today, here goes . . . .

1. It’s possible March was the outlier rather than April.

The original report for March was that 916,000 jobs were added. In this month’s report it was revised down to 770,000. Below is a graph of “civilian employment” from the household report (blue), “employment” from the establishment report (which is the commonly reported number (red), and the monthly change in initial jobless claims (green, inverted so that a decline shows as a positive, /100 for scale):

Note that in general - but not always! - the change in jobless claims correlates well with the change in both of the jobs numbers. Note also that the April change in jobless claims was the largest since early on in the pandemic. 

That being said, there have been *only* about a dozen previous times in the last 50+ years when initial claims declined as much as they did in April, but before the pandemic, the median change was about +350,000 for such changes. That’s a very small sample, so a large variance can easily be expected.

In any event, the 2 month change for March and April in the jobs report was +1,036,000 as currently revised, or 518,000/month. The comparable “civilian employment” 2 month number from the household survey was 937,000, or 468,500/month. The household report # now looks very close to the establishment survey’s number. In other words, the original establishment report of 916,000 for March may have been the outlier, and maybe we should have expected #s closer to the 350,000 median that was correlated with similar improvement in the jobless claims numbers.

2. But the likelihood of big job gains isn’t over - and may be missed by the establishment survey

There are still a ton of closed businesses and laid off employees out there. Fortunately, I’ve been saved the intensive work of sorting out those losses by jobs categories, because it’s already been done by the American Institute of Economic Research, which produced the below two graphs, first of the raw numbers of current pandemic job losses in each sector:

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Disclaimer: This blog contains opinions and observations. It is not professional advice in any way, shape or form and should not be construed that way. In other words, buyer beware.

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