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Putting the April Jobs Report in Perspective

The April jobs report is out, and the numbers are an unequivocal improvement from March.

U.S. employers added 165,000 jobs last month, more than the 148,000 economists were expecting and almost double the 88,000 jobs added in March. The extra hiring pushed the unemployment rate down to 7.5%, the lowest it’s been since December 2008.

To truly understand the April jobs report, however, it must be placed in its proper context. It must be judged, in other words, against past Aprils.

Here’s how this April stacks up against the three other Aprils since the recession ended:

  • April 2012: 112,000 jobs added – second-weakest month of the year.
  • April 2011: 304,000 jobs added – strongest month all year.
  • April 2010: 239,000 jobs added – second-strongest month all year.

So April has traditionally been sort of an all-or-nothing month. Compared to last April, this year’s jobs numbers look great. Compared to the two previous Aprils, however, the numbers are still rather modest.

What makes this April’s jobs report look like a smashing success is that it beat expectations that had been lowered by March’s disappointing hiring numbers. The 165,000 jobs that were added actually makes April the third-slowest hiring month since October.

Given March’s gloomy results, the April jobs report is certainly encouraging, and is sure to give markets yet another boost today (all three major indices were up roughly 1% at the open on Friday). But it doesn’t mean the U.S. economy is fully recovered.

At 7.5%, the unemployment rate is still higher than it was at any point between September 1992 and December 2008. Ben Bernanke and the Fed will continue their quantitative easing bond buybacks until the rate drops another full percentage point.

So don’t let the improved jobs numbers and the record-high stock market levels lull you into a false sense of security – not with the dreaded “Sell In May” period officially underway.

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