05/03/2013 09:06 am ET Updated Jul 03, 2013

April Jobs Report Comes in Better Than Expected


Payrolls increased by 165,000 last month and the unemployment rate ticked down to 7.5 percent, in a jobs report that painted a considerably brighter picture than last month's version. In fact, the disappointing 88,000 payroll gain for March was revised up in today's report to 138,000, and in February, new revisions show a large increase of 332,000 jobs.

That means employers added 114,000 more jobs in February and March than we thought, bringing the monthly average payroll gains over the past three months to a healthy 212,000 per month. Job growth at that pace, if it persists, should be enough to gradually, albeit slowly, bring down the unemployment rate. In fact, the decline in the jobless rate from 7.6 percent in March to 7.5 percent in April was due not to a shrinking labor force (i.e., people giving up looking for work) but to more people getting jobs.

Those looking for losses in sequester-sensitive industries could see some evidence in the report, as construction (down 6,000), government (down 11,000), and manufacturing (zero jobs added) all came in weak. Thus, all of the job gains last month came from private, service producing industries. Also, in signs that labor demand is still not strong enough, wage growth remains subdued, up 1.9 percent over the past year, and average weekly hours ticked down last month.

But the bottom line is that the April numbers, along with the revisions, reveal a considerably healthier job market than we thought, with accelerating gains in hiring and a slowly declining unemployment rate. Key industries, like manufacturing, construction, and especially government still bear close watching, and the on-again, off-again pattern of these jobs reports suggests that the economy's growth is not as solidly linked to the labor market as we need it to be.

But we're headed in the right direction, even if it's in fits and starts.

This post originally appeared at Jared Bernstein's On The Economy blog.