Uptick for Jobs or Another Disappointment?

The April Bureau of Labor Statistics jobs report is approaching, and the question now is whether it will be better than March's disappointing gain of 126,000.

The April Bureau of Labor Statistics jobs report is approaching, and the question now is whether it will be better than March’s disappointing gain of 126,000. Economists and other observers think so: the consensus estimate, according to Bloomberg Business, is a net of 220,000 new jobs, but with an unusually wide range of only 180,000 on the low side to a very robust 335,000 on the high side. Also, Bloomberg predicts that the unemployment rate will move down one-tenth of a percentage point to 5.4 percent. Whatever happens, it’s a fairly important report, at least for its impact on interest rates. Another crummy report, or even a mediocre one, would very likely put an end to the notion of a rate hike at the June FOMC meeting—which would allow a bit more time for real estate deals at historically low rates.

The March report was a surprise, but there’s a case to be made that the month was merely the latest periodic outlier among monthly job reports. Since the end of the recession, such sudden but temporary drops have been characteristic of hiring patterns nationwide. In February 2013, for instance, the economy created 236,000 jobs; in March the total was only 88,000. Soon the number had bounced back to nearly 200,000. In June 2014, the total was 8,000; by August, it had dropped to 142,000. But by November, the total was over 400,000, the strongest of the recovery. That is to say, there are a lot of peaks and valleys.

Automated Data Processing reported its employment numbers on Wednesday. According to the company, which handles large amounts of payroll processing, there was an increase of 169,000 private-sector jobs in April. As it happens, however, ADP and the BLS rarely come very close to a match (which is partly understandable, since the BLS reports on public-sector jobs, too), so for any given month, ADP isn’t much of a predictor. Except that on the whole, ADP tends to come in well below the revised BLS numbers (though not always). Still, ADP might point to the broader trend in hiring—that is, mediocre for the month—without nailing the specific numbers for the month.

Other employment data out this week included the ISM non-manufacturing employment index, which increased in April to 56.7 percent. Historically, the ISM non-manufacturing employment index has been somewhat better at predicting the direction of the BLS employment report, and an uptick like this foretells a somewhat better than mediocre jobs reports (the consensus of 220,000, for instance, would count as better than mediocre, but not stellar). Finally, the U.S. Department of Labor reported on Thursday that the annualized rate of unemployment claims for last week was an annualized 283,000—a reasonably good number, as they’ve been for some time. Any rate below about 300,000 means that businesses aren’t shedding jobs precipitously.