The U.S. economy added a whopping 288,000 new jobs in April, beating most economic forecasts for the month and supplying the Obama administration with a welcome boost after other policy thrusts such as the minimum wage bill foundered earlier this week.
The U.S. Bureau of Labour Statistics announced on Friday that concomitant with the rise in the non-farm payroll numbers, the unemployment rate dropped by 0.4 percentage points to 6.3 per cent in April, a five-year low. Economists were said to have been anticipating 210,000 new jobs created and a 6.6 per cent unemployment rate.
However, despite the positive gains for job numbers, thunderclouds loomed over the economy in the form of a dramatic fall in the labour force participation rate, which sank to 62.8 per cent from 63.2 per cent in March, to hit a 35-year low.
In absolute numbers this translated to 806,000 people dropped out of the labour force, according to BLS figures though BLS Commissioner Erica Groshen was quoted saying, “Our analysis of the household survey suggests the labour force decline was mostly due to fewer people entering the labour force than usual, rather than more people exiting the labour force.” BLS statistics nevertheless suggested that the employment gains were widespread across economic sectors, led by job growth in professional and business services, retail trade, food services and drinking places, and construction.
Expressing cautious optimism regarding the findings Jason Furman, Chairman of the Council of Economic Advisers (CEA), said that while employment growth was “solid” in April, it was still broadly consistent with the recent trends we have been seeing in the labour market. Mr. Furman added, “The President continues to emphasise that more can and should be done to support the recovery, including acting on his own executive authority to expand economic opportunity, as well as pushing Congress for additional investments in infrastructure, education and research, an increase in the minimum wage, and a reinstatement of extended unemployment insurance benefits.”
The CEA has estimated that in the face of Republican blockades on Capitol Hill, which have prevented certain benefits from extending into 2014, the economy may have already lost of 80,000 jobs so far this year and another 160,000 may be on the line for the remainder of the year.
