The U.S. job market saw a strong rebound in April, driving the unemployment rate to the lowest level in a decade.
The economy saw 211,000 jobs added in April, according to new government data released on Friday, May 5. The job market boost dropped the unemployment rate to 4.4 percent, the lowest level since May 2007.
The latest stats should calm some fears about the state of the economy, but we’ll see if the job market remains strong in the following months as well. In April, the average hourly pay increased to $26.19, marking a 2.5 percent rise compared to last year, but a slightly slower growth rate than in previous months.
Nevertheless, the report indicates an increasingly strong economy with a constantly expanding labor market, which helps wash away some damage left from the recession.
According to the report, the segments that saw job gains are health care and social assistance, leisure and hospitality, mining, and financial activities.
U.S. Labor Market: Job Gains By Industry
Leisure and hospitality saw 55,000 jobs added in April, health care and social assistance gained 37,000 jobs, social assistance gained 17,000 jobs, financial activities gained 19,000 jobs, while mining added 9,000 jobs. Professional and business services also saw an upward trend in employment, with 612,000 jobs added in the past 12 months.
Other major job market segments such as manufacturing, construction, retail trade, wholesale trade, information, transportation and warehousing, and government remained largely unchanged.
The unemployment rate refers to the percentage of the population made up of individuals who are actively looking for employment, but can’t find a job. At 4.4 percent, the rate is now lower than the level the Federal Reserve targeted for the long term.
U.S. State Of Economy
The state of economy should see further improvements thanks to better measures of unemployment and underemployment. For instance, the U-6 rate measure that covers individuals who gave up looking for a job, or those who work part-time but want to work full-time, dropped to 86 percent in April, the lowest level in the past decade.
On the other hand, the U.S. economy would need between 75,000 and 100,000 new jobs per month to keep up with the growth in the working-age population.
President Donald Trump inherited a solid job market from the Obama administration and pledged to boost economic growth even further, strengthening the labor market by reducing regulation and taxes.
Trump praised the new labor report in a tweet, noting that things are starting to look up.
Great jobs report today – It is all beginning to work!
— Donald J. Trump (@realDonaldTrump) May 5, 2017
However, it’s worth taking into consideration that while encouraging, these figures for unemployment rates could be skewed. More specifically, the overall unemployment rate might seem artificially lower than it actually is if fewer U.S. citizens are working or actively looking for a job. For this reason, economists prefer to rely on the participation rate of the labor force, measuring the percentage of the population that’s either working or actively looking for a job.
The participation rate hit its peak in 2000 or so, but has notably dropped since then. Demographic changes such as the retirement of baby boomers likely contributed to that drop, but can’t account for all shifts. Consequently, economists believe that other fundamental shifts in the economy are behind the lower participation rate.
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