Jobs Report Outperforms Rotten Expectations

a | A

If it hadn't been for yesterday's report on initial jobless claims, which fell to a five-year low, expectations for today's employment report would have been horrendous. Instead, they were just lousy.

With that in mind, the jobs numbers delivered a pleasant surprise. Non-farm payrolls increased 165,000 in April; the private sector added 176,000 jobs. March's 88,000 increase was revised up, as was February's, by a combined 114,000. With the exception of hiring for the decennial census in May 2010, the February increase of 332,000 was the largest since November 2005.

That the revisions to prior months continue to be positive should be a reminder not to draw macro conclusions from the initial print. In a technical note included in every report (one that clearly few read), the Bureau of Labor Statistics warns about the "reliability of the estimates." Translating the statistician-speak: A payroll increase of 100,000 in any month is statistically insignificant from an increase of 10,000 or 190,000. What's more, these are rounding errors in a labor force of 135 million.

This is something the Federal Reserve should keep in mind as it decides whether "to increase or reduce the pace" of its $85 billion monthly purchases.

The strongest aspect of the March report -- an increase in the workweek -- was more than reversed in April. The broadest measure of unemployment, which includes those working part-time for economic reasons, notched up a tick to 13.9 percent. On a brighter note, the unemployment rate fell last month to 7.5 percent even as the labor force increased.

Today's report was certainly one of the brightest spots in a month of consistently weak data. Let's hope the revisions reflect the trend.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.