Grinding Down: U.S. Unemployment Falls to 7.5% as 165,000 Jobs Are Created

Last Updated: 9:27 a.m.

The national unemployment rate ticked down to 7.5 percent in April, from 7.6 percent in March, as the economy added 165,000 jobs, a bit more than analysts had predicted. But job-creation figures for the two previous months were revised upward, with 332,000 jobs created in February (instead of 268,000) and 138,000 in March (instead of 88,000).

Since January, the economy has added nearly 800,000 jobs. But that’s slightly down from the 209,000-a-month average in the last four months of 2012. And projections are grim for the next few months as austerity imposed from Washington–the sequester compounding previous fiscal tightening–and the resumption of payroll taxes at their usual level (after a 2 percent break for two years) take a toll on job creation. The sequester’s spending cuts did not begin to take full effect until March.

Other underlying factors are not yet showing signs of strength: The labor force participation rate was still a low 63.3 percent in April, and the employment-to-population was unchanged at 58.6 percent, where it’s hovered for the past year. Both figures suggest that millions of workers remain on the sidelines, having dropped out of the workforce entirely.

The so-called U-6 alternative measure of unemployment, which takes into account those who have dropped out of the workforce and those who work part-time because their hours have been cut or because they can’t find full-time work, rose to 13.9 percent, from 13.8 percent in March. The number of people employed part time for economic reasons increased by 278,000, to 7.9 million, largely offsetting a decrease in March.

A few highlights: Professional and business services added 73,000 jobs in April and 587,000 jobs over the past year. Within leisure and hospitality, employment in food services and drinking places rose by 38,000 over the month. Job growth in the food services industry averaged 25,000 per month over the prior 12 months. Retail trade employment increased by 29,000. Health care added 19,000 jobs in April.
Employment changed little over the month in construction, which gained an average of 27,000 jobs per month over the prior six months. Manufacturing employment was unchanged.

Employment in other major industries, including mining and logging, wholesale trade, transportation and warehousing, financial activities, and government, showed little change over the month.

The average workweek for all employees on private payrolls decreased by 0.2 hour in April to 34.4 hours. Within manufacturing, the workweek decreased by 0.1 hour to 40.7 hours, and overtime declined
by 0.1 hour to 3.3 hours. Average hourly earnings for all employees on private payrolls rose by 4 cents to $23.87. Over the year, average hourly earnings have risen by 45 cents, or 1.9 percent, not enough to overcome cost-of-living increases.