April Jobs Report Surprises on the Upside

by CoyDavidson on May 6, 2011

Research Matters

By: Ross Moore | Chief Economist, Colliers USA

Earlier today, the Bureau of Labor Statistics (BLS) released the April job numbers which came in considerably above consensus. Most economists were expecting 185,000 new jobs, but actual employment gains were 244,000. Moreover, February and March job numbers were revised upward by 41,000, and for the three-month period, average monthly employment was a relatively robust 233,000. Even in the face of higher energy prices, the key take-away from this month’s employment report is that employers appear willing to take on new employees after being hesitant for some time.

Private Sector Employment Up for 14th Consecutive Month and Highest Level in Five Years

Private sector employment continues to show healthy growth with the addition of 268,000 jobs in April, capping off 14 months of unbroken increases totaling 2.1 million new jobs. On a year-over-year basis private sector employment is up 1.6%. This confirms our view that many businesses are back on a firm footing and are beginning to ramp up for expansion. Dragging the job numbers down, however, are state and local governments which are being forced to shed jobs in an effort to balance their respective budgets. For the month of April, state and local employment fell by 22,000. This was the sixth consecutive month state and local employment has fallen and is a trend that is expected to continue for some time.

Manufacturing Up for Sixth Straight Month – The First Such String of Gains Since Early 1998

As the chart above illustrates, manufacturing employment rose by 29,000 jobs in April, marking the sixth consecutive month of gains for this important sector of the economy. This is the first time this has happened since early 1998. For the six-month period ending April 2011, 167,000 manufacturing jobs have been created. These job gains support the ISM manufacturing index, which shows manufacturers are leading the economic recovery. Transportation and Warehousing employment was also up in April, and over the last six months has added 49,000 jobs. Both manufacturing and Transportation & Warehousing are expected to continue adding jobs and will serve as important drivers for the industrial market.

Near Term Monthly Employment Reports Are Expected to Remain between 200,000 and 250,000 Jobs per Month

The April jobs report confirms our view it is not unreasonable to expect 200,000 to 250,000 additional jobs per month; however, the recent volatility in energy prices and the return of geopolitical concerns is cause for unease. Initial jobless claims, which is more of a real time economic indicator, has been on the rise in recent weeks, suggesting job gains might be nearer the 200,000 level than 250,000. Recent productivity data, however, came in relatively low suggesting that employers have squeezed as much output from existing employees as they can and will be forced to increase payrolls if they want to grow revenues. Overall, the latest jobs report was good news for commercial real estate, and supports our view that leasing markets will continue to improve for all property types.

Ross Moore is the Colliers International’s Chief Economist with a focus on providing bottom-up and top-down analysis of commercial real estate markets across the United States. In addition to his North America wide reports, Ross also authors all global research produced by Colliers.

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