The unemployment rate dropped to its lowest level since September 2008 as employers added 288,00 new jobs in April. The news is being heralded as a clear sign that the United States economy is picking up steam after an unusually harsh winter which economists blame for slow job growth.
The Department of Labor also announced Friday that the higher-than-expected hiring numbers caused the unemployment rate to drop to 6.3%, a sharp fall from last month’s rate of 6.7% and a much larger drop than expected. The unemployment rate had been steadily, if slowly, falling over the course of the last few months. Employers added an average of 238,000 jobs each of the last three months, a marked improvement over the three month period prior to that, in which only 167,000 new jobs were added in each month.
The numbers far outstrip analysts’ expectations, the majority of whom estimated that 215,000 jobs would be added in April. A Bloomberg poll, conducted before the report was released at 8:30 Friday morning, showed a number of economists expecting the unemployment rate to drop by a mere 0.1%, down to 6.6%.
The data seem to confirm the belief that economic growth had been held back by the unusually harsh winter, although some pointed out that the unemployment figure could be skewed by a drop in the labor force participation rate. That rate fell 0.4 percentage points to 62.8%, the same level at which it stood in January. That statistic reflects the number of working aged Americans who are employed or searching for a job; people are only counted as unemployed if they are actively looking for work.
Patrick O’keefe, director of economic research at CohnReznick, told ABC news that job creation was accelerating. He pointed out that 1.3 million people have entered the labor force in the first quarter of 2014, counterbalancing the 806,000 whose exodus reflects the lowered participation rate. O’keefe also highlighted the fact that while the participation rate data was surprising, it is a “volatile” figure month-to-month.
Todd Schoenberger, a managing partner at LandColt Capital, was exuberant in his response to news of the lower unemployment figures, speaking to USA Today shortly after they were released.
“The econothaw is on! The April headline and the March revision are showing us a net gain of 324,000 jobs. Over the prior 10-year period, the second quarter has always been the most robust for job growth; so it was critical we have a pop in April. This figure bodes well for the rest of the quarter. Challenges may appear in the second half of the year due to slower GDP rates, but today’s report is reason to celebrate.”
Statistics for February and March were also revised, showing that employers added a combined total of 36,000 more jobs during those months that previously reported. Economists still expect the rate of second quarter growth to be on pace for a 3% goal. They also point out that the lowered unemployment rate is tied to broad-based hiring across all sectors of the economy.