In recent years, when the weather begins to heat up, the job market has gone cold. This so-called “spring swoon” has time and again dashed many hopes for a more sustained and vigorous economic recovery.
But with today’s report from the Labor Department that the U.S. economy added 175,000 jobs, and that the unemployment rate remaining “essentially unchanged” at 7.6%, there’s more reason to believe we’ve escaped this pattern in 2013.
But wasn’t the unemployment rate 7.5% last month? Yes, it technically was, but one must remember that these figures are rounded to the nearest tenth of a percent, so even if the headline numbers appears to jump, that may be the result of only a slight increase (the same goes for decreases as well). Furthermore, the unemployment rate is derived from a survey of households that has a much higher margin of error than the so-called establishment survey of businesses — and so small changes in the unemployment rate are less meaningful than the total number of jobs added.
That said, the report isn’t quite as impressive as the 175,000 headline number would suggest. Revisions to the past two month’s data show that March and April produced 12,000 fewer jobs than we had thought. Furthermore, the three-month trend of job growth now sits at 155,000 jobs per month versus 233,000 from December through February. When looking at it in this light, we still see hints of the spring slowdown that we’ve experienced in previous years, though it’s much less pronounced in 2013.
Other key figures within the report changed very little. Total hours worked per week stayed flat, while average hourly earnings increased by just one cent. Alternative measures of employment, like the employment population ratio, which measures the ratio of those with a job to the entire working-eligible population, remained unchanged, as it has for much of the past year.
This ratio is important to pay attention to because the headline unemployment rate can fall simply due to people dropping out of the labor force. A decline in this “labor force participation rate” could be a result of our aging population, as more workers retire, but it can also be a sign of a weak job market. In a more vigorous recovery, you’d likely see the employment-population ratio rise, and not just the unemployment rate fall.
That being said, the headline number of 175,000 jobs added is a pretty solid figure, and should help ease fears of a slowing recovery. Data earlier this week, from the weak gauge of manufacturing activity from ISM, to a report from payroll firm ADP showing weak job growth in May, had spooked stock markets and convinced many pundits that today’s report would be less than stellar.
All in all, this report shouldn’t do much to change your impression of the economy compared with previous months. As University of Michigan economist Justin Wolfers wrote this morning, “Employment is growing. It’s growing slower than we want. But it’s growing enough to (slowly) bring down unemployment.”