Unemployment rises to 9.9%; Update: U-6 rises to 17.1%

posted at 8:53 am on May 7, 2010 by Ed Morrissey

Once again, the numbers on unemployment tell a conflicting story.  The unemployment rate rose to 9.9%, but job growth appears to have finally begun in April, with the addition of 290,000 jobs, including 66,000 Census jobs.  Most sectors saw growth, but the returning job seekers overwhelmed the opportunities:

Nonfarm payroll employment rose by 290,000 in April, the unemployment rate edged up to 9.9 percent, and the labor force increased sharply, the U.S.
Bureau of Labor Statistics reported today. Job gains occurred in manufacturing, professional and business services, health care, and leisure and hospitality. Federal government employment also rose, reflecting continued hiring of temporary workers for Census 2010. …

In April, the civilian labor force participation rate increased by 0.3 percentage point to 65.2 percent, as the size of the labor force rose by 805,000. Since December, the participation rate has increased by 0.6 percentage point. The employment-population ratio rose to 58.8 percent over the month and has increased by 0.6 percentage point since December. …

In April, nonfarm payroll employment rose by 290,000. Sizable employment gains occurred in manufacturing, professional and business services, health care, and in leisure and hospitality. Federal government employment increased due to the hiring of temporary workers for Census 2010. Since December, nonfarm payroll employment has expanded by 573,000, with 483,000 jobs added in the private sector. The vast majority of job growth occurred during the last 2 months.

The news was mostly good in most sectors.  Manufacturing was up 44K, mining added 7,000 jobs, construction continued its rebound with a +14K, and leisure and hospitality added 45,000 jobs.  That’s a good showing and an indication that the job market has finally stabilized.

It’s not all good news. There are two million more people not in the labor force now than a year ago, with about the same number of people desiring a job (5.865 million to 5.868 million in April ’09).  Those marginally attached to the labor force are significantly higher now (2.432 million) than a year ago (2.089 million).  Both numbers, though, are improvements over March 2010 and before.

On the decline, the Obama administration was able to claim lower numbers by using the unemployment rate and avoiding the issue of discouraged workers.   They’ll pay for that on the incline as those workers start looking for jobs again.  For the next several months, that unemployment rate may hide good news as it hid the bad news last year.

Update: The Wall Street Journal notes that the U-6 number that calculates complete unemployment and underemployment also rose:

The 9.9% unemployment rate is calculated based on people who are without jobs, who are available to work and who have actively sought work in the prior four weeks. The “actively looking for work” definition is fairly broad, including people who contacted an employer, employment agency, job center or friends; sent out resumes or filled out applications; or answered or placed ads, among other things. The number ticked up this month as more people came back into the labor force to look for jobs.

The U-6 figure includes everyone in the official rate plus “marginally attached workers” — those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that’s all they could find.

What does the divergence of the U-6 number and the base unemployment rate mean?

A U-6 figure that converges toward the official rate could indicate improving confidence in the labor market and the overall economy. This month pushes convergence even further away.

True, but it’s important not to oversell pessimism, either.  In order to bring both numbers into line with each other, we need overall job growth first.  We have that in April’s figures.  It’s not enough to make everything all right, of course, but it’s finally a step in the right direction.  If it doesn’t pick up some momentum this month, then the growth can be called a fluke.


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