April job numbers at 253,000, revised down by 149,000.

Surprising Job Creation Numbers for May 5

The Establishment Survey reported that 253,000 new jobs were created on May 5, exceeding market expectations of 180,000 jobs. The average three-month creation of jobs is 222,000, according to the report. The Household Survey, which is compiled from different data, showed that 139,000 people were newly employed.

Unemployment Rate and U6 Number

The unemployment rate remained at 3.4 percent, and the number of unemployed persons was 5.7 million, which is little changed from March figures. The U6 number was 6.6 percent, which is a measure of the total unemployed plus all persons marginally attached to the labor force plus total employed part-time for economic reasons, as a percent of the civilian labor force, plus all persons marginally attached to the labor force. The labor participation rate remained at 62.6 percent.

Jobs Creation by Average Weekly Wages

Our exclusive chart of jobs creation by average weekly wages shows that annual real wages declined in April in all categories of employment, except mining and logging, utilities, and construction. Employment in sectors that tend not to have government support had their biggest gains in professional and business services. Jobs in education and health services are private employment, but tend to be heavily subsidized by the government with federal programs such as Medicare, Medicaid, and federally guaranteed student loans. Pure government employment, which is not reflected in the chart, added another 23,000 jobs. Employment in leisure and hospitality, workers such as hotel maids, restaurant servers, and bartenders, declined nearly 25 percent from last month.

Other Data

The April ISM Manufacturing Index printed Monday at 47.1, up slightly from the abysmal 46.3 that printed for March and slightly above market expectations. Wednesday’s release of the ISM Services Index showed growth at 51.9 percent. The Job Opening and Labor Turnover Survey (JOLTS) print for March was down 384,000. Building permits in March were at a seasonally adjusted annual rate of 1,413,000. Privately owned housing starts in March were at a seasonally adjusted annual rate of 1,420,000. Personal income and outlays for March showed disposable personal income up 0.4 percent in current dollars and 0.3 percent in chained 2012 dollars. The Personal Consumption Expenditures (PCE) Index, excluding food and energy, printed at 4.6 percent.

Opinion

While the job creation numbers for May 5 were surprising, we continue to believe that there will be no “soft landing.” There will be a mild recession in the second half that could worsen in 2024, depending on the policy response. We predict second quarter 2023 GDP will print between 0.25 percent (one-quarter percentage point) and 1.0 percent. Jobs numbers, which have not printed below expectations in nearly a year, will most likely print below 200,000 new jobs beginning in the third quarter.

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