April Jobs Data: A Warning Signal

By at 6 May, 2022, 10:50 am

by Raymond J. Keating –

“The Employment Situation” report – or jobs report – released each month by the Bureau of Labor Statistics is one publication based on two different surveys. One survey is the establishment survey, which offers nonfarm employment numbers, and the second survey is the household survey, from which we get labor force and employment data, including the widely reported unemployment rate.

A key difference between these surveys is that the household survey tends to better capture startup and small business activity. However, the household survey also tends to be a bit more volatile.

Also, while the two surveys move in the same direction on employment, there are months in which they diverge, and sometimes quite markedly. The April 2022 report ranks as one of these perplexing months.

Establishment Survey vs. Household Survey

The establishment survey tells us that total nonfarm payroll employment increased by 428,000 in April. That’s good.

However, the household survey tells a very different story for April.

This survey found that employment in April dropped by 353,000. That was the first monthly decline since April 2020. Plus, the labor force shrank by 363,000. Those not in the labor force increased by 478,000. The only reason that the unemployment rate remained unchanged in April at 3.6 percent was due to the labor force declining.

Source: Federal Reserve Bank of St. Louis, FRED

As a result, the labor force participation rate declined from 62.4 percent in March to 62.2 percent in April, and the employment-population ratio went from 60.1 percent in March to 60.0 percent in April.

The question is this: Are the results from the household survey in April a case of one-month volatility, with growth resuming in May, or is the household survey serving as a warning signal? After all, since GDP declined in the first quarter, are these troubling numbers from the household survey further confirmation of a slowing or declining economy that is being hit by inflation, as well as by misguided federal policymaking when it comes to tax, regulatory, trade, spending and monetary policies?

Like the inflation data, policymakers should take these household survey numbers seriously, as a wake-up call to get policy on a sound track. That means pro-growth tax and regulatory relief, advancing free trade, reining in government spending, and Fed policy focused on price stability.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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