Unemployment falls to 7.5%; job creation solid in April

May 3, 2013

The job market plugged along steadily, and unemployment fell in April, according to new data out Friday, suggesting that the U.S. economy is still expanding.

The nation added 165,000 jobs in April as the unemployment rate fell to 7.5 percent, from 7.6 percent in March, the Labor Department said on Friday. The news was particularly welcome after a mere 88,000 jobs were initially reported to have been added in March; the new report revised that estimate to a healthier 138,000, suggesting that the labor market isn’t slumping as much as it had appeared.

The leisure and hospitality sector, which includes restaurants, added 43,000 jobs in April.
The leisure and hospitality sector, which includes restaurants, added 43,000 jobs in April.

In particular, there was little evidence in the report that the “sequester” of automatic federal spending cuts is having a major impact on the job market so far. Federal government employment excluding the postal service fell by 4,900 jobs, while the sectors that include many government contractors remained on their job creation trends of the last several months.

“This bolsters the case that the U.S. economic expansion will be able to survive the combined headwinds of sequestration and a deepening recession in Europe in the months ahead,” said Scott Anderson, chief economist of Bank of the West, in a research note. “It does not, however, rule out a ‘Spring Swoon’” in overall growth.

Markets responded favorably to the better economic news, with the Standard & Poor’s 500 index up 1.1 percent at 10:00 a.m.

Many of the details of the new report also point to a steady job market: The drop in the unemployment rate, for example, was driven by more people finding jobs, not by people leaving the labor force. Some  293,000 more people described themselves as employed in a survey of households, and 93,000 fewer said they were looking for a job but couldn’t find one. The ratio of the population with a job ticked up to 58.6 percent, from 58.5 percent. And the number of long-term unemployed, those out of work and looking for a job for more than 27 weeks, fell by 258,000.

More disappointingly, the average workweek fell to 34.4 hours, from 34.6 hours, suggesting businesses are relying on part-time workers and possibly reflecting the impact of the sequester. And a broader measure of unemployment, capturing people who have given up looking for a job out of frustration and those who are working part-time but want full-time work, actually rose to 13.9 percent from 13.8 percent.

The job gains were concentrated entirely in private-sector service industries: Manufacturing employment was flat and construction was down. Government employment at all levels—federal, state and local—declined as well.

The bright spots for job creation included professional and business services, which added 73,000 positions, and leisure and hospitality, which added 43,000 jobs.

“While more work remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression,” said Alan Krueger, chair of the White House Council of Economic Advisers, in a blog post.

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