Unemployment Rate Facts April 2011

During April, the unemployment rate edged up 0.2%, raising the rate to 9.0%, according to data [.pdf] released today from the Labor Department. Despite this rise in the unemployment rate, which is up from 8.8% in March, the US economy added 244,000 jobs during April. The private sector grew for the seventh consecutive month, with an addition 268,000 jobs, whereas the public sector shed 24,000 jobs, which marks the eleventh consecutive month with a decline in government positions.

Ironically, overall job growth in April was greater than any month since May 2010, when hiring for the US Census peaked, yet the unemployment rate edged up. Many would expect job growth to correlate with a decline in the unemployment rate, rather than an increase.

As discussed in the past, statistical methodologies of the Labor Department prevent the unemployment rate from solely representing fluctuations in the number of jobs. For instance, the unemployment rate decreased 0.4% in January, but the economy only added 36,000 jobs. Without doubt, other factors must contribute to the unemployment rate, such as seasonal adjustments, the size of the marginally attached workforce, and individuals who begin to look for work again.

During April, 113,000 individuals or “reentrants” began looking for work again, which means these individuals were included in the unemployment rate, but they were previously excluded because they were not looking for work. Further, this amount of reentrants also indicates job seekers are beginning to perceive job prospects more favorably. While the Labor Department does not specifically disclose the extent to which each of their methods influences the unemployment rate, discrepancies between overall job growth and the direction of the unemployment rate suggests the additional methods have noticeable impact.

Regardless of these statistical methods on the short-term scale, the most important indicator is overall job growth, which continued a modest trend in April. The US economy has grown 768,000 jobs in 2011. Similar to private sector job growth in February and March, service industries accounted for a majority of the new jobs in April. Though, every private industry recorded job growth in April, except for temporary help services, which was likely a result of fewer utilizing tax services. The industries with the greatest job growth in April included:

Retail trade: +57,000 jobs.
Professional and business services: +51,000.
Education and health services: +49,000 (health care and social assistance accounted for 42,000 of these jobs).
Leisure and hospitality: +46,000.
Manufacturing: +29,000.
While almost every industry experienced job growth during April, government employees continued to face cutbacks, as mentioned above with a decline of 24,000 positions in April. Among these 24,000 positions, local governments accounted for 14,000 lost jobs, state governments accounted for 8,000 jobs, and the federal government accounted for 2,000 jobs. More specifically, 18,300 of these 24,000 lost jobs were non-educational positions in either state or local governments.

Altogether, overall job growth in the US economy reflects a positive trend, especially considering the last three months have each brought at least 200,000 new jobs. However, the unemployment rate remains historically high and many economists have questioned whether rising energy costs would deter job growth. Despite the fact the price of oil rose over 20% in the past two months, as well as gas prices nearing record highs, these energy costs apparently have not yet resulted with a deceleration in job growth. Fortunately, the price of oil began to fall yesterday and is currently $98 per barrel or the lowest price since mid-February.

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