April was a good month for job growth in America. *Probably.
The number of U.S. jobs grew by 244,000, the biggest jump in five years, according to this morning's big jobs report.
This is good, solid job growth, more than enough to keep up with population growth, and much better than analysts were expecting. It's the kind of job growth that can really start to push down the unemployment rate.
Except — here's where the asterisk comes in — the unemployment rate actually ticked up a bit in April, from 8.8 percent to 9 percent.
Unemployment measures the number of people looking for jobs, and doesn't include those who have given up on finding work. When the economy improves, many people who had formerly given up on finding work start looking for jobs again. This can drive the unemployment rate up, even as the economy is adding jobs.
But when you dig into the April numbers, you don't see evidence of this pattern. The number of people looking for work in April barely budged between March and April.
So what was going on?
The answer is technical and rather unsatisfying.
The figures for the unemployment rate and the number of jobs added each month actually come from two different surveys. The unemployment numbers come from a survey of households (called, reasonably enough, the "household survey"). The jobs numbers come from a survey of businesses (the "establishment survey").
While the two surveys do tend to track each other pretty closely over the long term, they don't always move in tandem each month.
I emailed Ian Shepherdson, of High Frequency Economics, about this issue. Here's the key part of his response:
over time the two measures follow the same underlying trends but the household survey is much more volatile over short periods.
In other words, when you can't square the jobs number and the unemployment number, focus on the jobs number, and hope unemployment ticks back down next month.
In a note this morning, Shepherdson used a one word exclamation to describe the jobs report — "Strong!" — and called the rise in the unemployment rate "noise."
Of course, even though there was strong job growth in April, the jobs picture is still grim. The unemployment rate is very high by historical standards. We've added roughly two million since last February— but we lost eight million during the three three years before that.
More on that in the next post.