This is a short note about our forecast of the April labor market. The data comes out this Friday, May 6.
Our labor market forecast is improving, slowly. Both February and March nonfarm payrolls increased by about 200 thousand, and we are tentatively confident that about 180 thousand can occur in April. This forecast reflects a small pickup in goods producing industries and a slight slowing in service producing industries. Government sector hiring should be similar to March, which was a decline of 14 thousand jobs.
With a similar gap between the establishment (payroll) jobs measure and the household survey employment measure as occurred in March, this would give a change in employed persons of about 256 thousand.
Regarding labor force, we project an increase of 114 thousand, a moderate increase. This follows March’s increase by 160 thousand. The combination of the labor force and the employed persons increase imply that the unemployment rate falls by one tenth: from 8.8 percent in March to 8.7 percent in April.
Zooming back out to a big-picture point of view: the economy is still not firing on all cylinders. There is evidence that the economy is moving back toward all cylinders, but at a slow pace. As a result, job gains will be moderate, and the unemployment rate will remain relatively high.