Making Sense of the Big April Jobs Gain

Economists are scrambling to make sense of the surprisingly strong April jobs report. As Bloomberg News reported, employers increased payrolls by the most in two years and the unemployment rate fell to 6.3 percent, its lowest since 2008.

The report has occasioned more than the usual amount of second-guessing, partly because the jobs gain of 288,000 in the survey of establishments was 70,000 above the median forecast of economists surveyed by Bloomberg.

What’s more, that good news was offset by some equally surprising bad news. An alternate measure of employment, surveying households rather than establishments, showed an outright decline of 73,000 jobs. The only reason the unemployment rate fell is that the labor force shrank by about 800,000 people. The participation rate in the labor force fell to 62.8 percent, matching the lowest level since 1978, from 63.2 percent a month earlier.

Here are some of the reactions from economists, culled from their notes to clients:

Morgan Stanley: “Strong report. … The plunge in the participation rate dashes hopes that an early year surge represented the start of a sustained cyclical turn.”

PNC: “This is convincing evidence that the virtually unchanged real GDP in the first quarter was mostly a ‘Frozen: The Economy’ horror flick and ‘Super Consumer to the Rescue’ will be the action thriller box office hit this spring.”

Barclays Research: A 2.3 percent gain in the average hourly earnings of production and non-supervisory employees is “in line with our view that further declines in the unemployment rate will coincide with a gradual firming in wages.”

Capital Economics: “The unusually severe winter weather may have hit activity and employment in January and February, but the economy is making up for that now.”

Deutsche Bank Securities: “The strength in the employment data should allow monetary policymakers to breathe a sigh of relief; thereby giving them the confidence to continue tapering asset purchases at a steady rate.”

And to end on a downer:

Mizuho Securities: “The details of the report were weak. … These data points on average fit with an economy running at or slightly below trend.”

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