The labor market remained hot while the Fed moved to put out the inflation fire. Here are the five things we learned from U.S. economic data released during the week ending May 6.
1. April was a solid month for job creation. Nonfarm employers added a seasonally adjusted 420,000 workers to the payrolls during the month, just short of the 428,000 new jobs in March. Even though this was the 24th consecutive month of job creation, the Bureau of Labor Statistics measure remains 1.190 million below its pre-pandemic peak in February 2022. In April, private-sector employers added 406,000 workers, split between 340,000 in the service sector and 66,000 in the goods-producing sector. The industries adding the most workers during the month were leisure/hospitality (+78,000), manufacturing (+55,000), transportation/warehousing (+52,000), and health care/social assistance (+40,900). The average weekly wage of $1,102.01 was up 4.6 percent from a year earlier.
The separate household survey kept the unemployment rate at its pandemic-low of 3.6 percent, even as 363,000 people departed the labor force. Also falling was the labor force participation rate (down 2/10ths of a point to 62.2 percent). The participation rate for adults 25-54 slipped by 1/10th of a point to 82.4 percent. The median length of unemployment held steady at 7.5 weeks, while the count of part-time workers wanting a full-time job declined by 137,000 to 4.033 million (itself a pandemic low). The broadest measure of labor underutilization (the U-6 series) crept up by 1/10th of a point to 7.0 percent.
The number of job openings and people quitting their jobs hit records (again) in March. Job openings grew by 205,000 to a seasonally adjusted 11.549 million during the month. Openings have risen 36.2 percent over the past year and now sit at an all-time record for the Bureau of Labor Statistics measure. The private sector was responsible for 10.504 million of the available jobs. Industries with at least one million open positions include retail, professional/business services, health care/social assistance, and accommodation/food services. Hiring not only continued to lag job postings, but it also decelerated in March, slowing by 95,000 to 6.737 million (+8.5 percent versus March 2021). Two industries—professional/business services and accommodation/food services—hired more than a million workers. Rising were separations, as 6.321 million people left their jobs in March (+14.1 percent versus March 2021). The count of people quitting their jobs rose to another record, up 152,000 to 4.536 million (+22.8 percent versus March 2021). Layoffs crept up by 51,000 to 1.405, 7.1 percent below year-ago levels.
The Fed took action. The policy statement released following the past week’s meeting of the Federal Open Committee Meeting acknowledged Q1’s drop in the gross domestic product (GDP) as it noted that consumer and business spending “remained strong” and that the labor market was “robust.” It also raised the specter that the Russian invasion of Ukraine and supply chain issues tied to COVID lockdowns in China will continue to add fuel to the inflationary environment. As a result, the Committee voted unanimously to raise the fed funds target rate by a half percentage point to a range between 0.75 percent and 1.00 percent “and anticipates that ongoing increases in the target range will be appropriate.” Further, the Fed will be shedding holdings of Treasury and mortgage-backed securities from its balance sheet starting in June.
Purchasing managers report continued growth in April. The PMI, the headline index from the Institute for Supply Management’s Manufacturing Report on Business lost 1.7 points during the month. The resulting reading of 55.4 was the PMI’s 23rd straight month above a reading of 50.0, the threshold between an expanding and contracting manufacturing sector. Falling were index components for new orders, production, employment, and inventories. Seventeen of 18 tracked manufacturing industries grew in April, led by apparel, machinery, and plastics/rubber products. Petroleum/coal products was the sole industry to report a slowdown.
The ISM’s Services PMI shed 1.2 points during the same month to a reading of 57.1. The Services PMI also has been above a reading of 50.0 for 23 consecutive months and 145 of the past 147 months. Improving were indices for business activity/production and new orders, while measures for new orders and employment dropped. Seventeen of 18 services industries expanded in April, led by construction, utilities, and management of companies/support services. Information was the sole service sector industry to contract.
Trade bloomed to a new record in early spring. Exports grew 5.6 percent in March to a seasonally adjusted $241.7 billion and imports surged 10.3 percent to $351.5 billion. The resulting deficit of -$109.8 was up a whopping 22.3 percent for the month and represented a new record for the Census Bureau and the Bureau of Economic Analysis data series. The deficit during the first three months of 2022 was 41.5 percent ahead of that from the same three months last year. The goods deficit swelled by $20.4 billion to a record -$128.1 billion, while the services surplus widened by $0.4 billion to +$18.3 billion. Boosting the former were increased imports for industrial supplies/materials (including finished metals shapes and crude oil), consumer goods (apparel, furniture, and toys), capital goods (computers), and automobiles. Exports for oil/petroleum and automobiles also jumped. The United States had its biggest goods deficits with China, the European Union, Mexico, and Canada.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending April 30, 2022, First-Time Claims, seasonally adjusted): 200,000, +19,000 vs. the previous week, -394,000 vs. the same week a year earlier). 4-week moving average: 188,000 (-66.2% vs. the same week a year earlier).
- Factory Orders (March 2022, New Orders for Manufactured Goods, seasonally adjusted): $557.3 million (+2.2% vs. February 2022; +14.2% vs. March 2021).
- Vehicle Sales (April 2022, Light Trucks and Autos, seasonally adjusted annualized rate): 14.29 million (+6.6% vs. March 2022; -15.4% vs. April 2021).
- Construction Spending (March 2022, Value of Construction Put in Place, seasonally adjusted annualized rate): $1.731 trillion (+0.1% vs. February 2022; 11.7% vs March 2021).
- Productivity (2022Q1-Preliminary, Nonfarm Business Labor Productivity, seasonally adjusted annualized rate): -7.5% vs. 2021Q4; -0.6% vs. 2021Q1.
- Consumer Credit (March 2022, Outstanding Non-Real Estate Backed Consumer Credit, seasonally adjusted): $4.539 trillion (+$52.4 billion vs. February 2022; +7.3% vs. March 2021).
- Mortgage Delinquencies (2022Q1, Delinquency Rate for Mortgages 1-4 Unit Residential Properties, seasonally adjusted): 4.11% (-54-basis points vs. 2021Q4; -227-basis points vs. 2021Q10.
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What We Learned About the U.S. Economy Last Week 