Employment situation: Superficial progress, at best

Payrolls expanded by 288,000 in April, and the unemployment rate dropped a large 0.4 percentage points to 6.3%. The numbers for February and March were revised higher for a total additional gain of 36,000.

There was a big drop in the number of people unemployed. The labor force dropped as well, bringing the labor force participation rate to a disappointingly low 62.8%. Because the number of unemployed dropped and the labor force shrank, there was an outsized move in the unemployment rate.

The number of people employed part time for economic reasons stood at 7.5 million. In the 2004 to 2006 period, these workers represented about 1% of the people employed. Now, they are closer to 2% of the people employed.

Although job gains were widespread, the leading industry was the professional and business services group. This is a broad umbrella that includes temporary help, and that’s the segment that showed the strongest gains.

Average hourly earnings remained unchanged at $24.31. Average weekly earnings were also unchanged at $838.70. Over the past 12 months, average hourly earnings increased 1.9%, a pace that is barely above the rate of inflation.

While the drop in the unemployment rate looks impressive, the details paint a very different—and slightly uglier—picture. With little improvement in the number of people employed part time for economic reasons and little movement in wages, the Federal Reserve is likely to stay the course with its accommodative monetary policy.

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