Caution signs inside good job numbers

UNITED STATES:

WASHINGTON (AP):

Employers in the United States (US) added a sizable 288,000 jobs in April. Hiring in February and March was better than first thought while the unemployment rate plunged to 6.3 per cent from 6.7 per cent.

At first glance, last Friday's US jobs report suggested that the agonisingly slow 5-year-old economic recovery had burst into a full sprint.

Yet several cautionary signs emerged from the report, starting with that spectacular plunge in the unemployment rate.

Here's why: The government uses two surveys for the jobs report. The job gain comes from a survey of businesses, the unemployment rate from a survey of households. Sometimes, the two conflict.

The survey of businesses showed 288,000 more jobs. Yet the household survey, in calculating unemployment, found that 73,000 fewer people had jobs.

Why did the unemployment rate sink? Because 806,000 fewer people were in the workforce. Many retired or ended their job hunts. And fewer-than-expected people began looking for work.

The unemployment rate typically drops when fewer people seek work: If they're not hunting for a job, they're not counted as unemployed.

Here are five cautionary signs from April's US jobs report:

1) 543,000 fewer people seeking work.

This suggests that the recovery lacks the kind of gravitational force needed to draw more workers back into the fold.

2) No housing rebound.

Builders added 32,000 workers in April. But just 41 per cent of them were for constructing homes. That share is usually around 50 per cent.

3) High-school grads and dropouts losing out.

People who've never been to college - about a third of workers older than 25 - are struggling. More than 200,000 high-school dropouts lost jobs last month. So did 276,000 high school graduates.

4) Flat wages.

Average weekly paycheques didn't budge in April. They were $838.70, exactly as in March. Stagnant pay could slow growth, since about 70 per cent of economic activity comes from consumers.

5) 45,000 more men working two full-time jobs

Imagine juggling two full-time jobs. About 198,000 men managed this balancing act last month - a sharp increase of 45,000 year-over-year.