Despite Job Growth, Unemployment Rises to 9.9%

Payrolls in the US added 290,000 workers in April, according to data released today by the Department of Labor (DOL) Bureau of Labor Statistics. It marks an increase from the 162,000 jobs added in March. Despite the gain in employment, the overall unemployment rate rose to 9.9%. Additionally, the U-6 measure of both un- and under-employment continued to rise — inching up to 17.1% in April, from 16.9% last month. Government hiring for the 2010 Census added 66,000 temporary workers in the month. The 2010 Census hiring — which rose this month from 50,000 in March — should peak in May, according to e-mailed commentary this week from TrimTabs Investment Research. “Job growth in April was much stronger than the consensus estimate of 150,000,” said TrimTabs CEO Charles Biderman. “While the Census Bureau was responsible for the bulk of hiring, the private sector finally started adding employees.” Despite the hirings, a 805,000-count surge in the size of the available labor force bumped the unemployment rate to 9.9% in April. This surge could be an indication of early economic recovery, according to e-mailed commentary from Paul Ashworth, senior US economist at Capital Economics. “A rebound in the size of the labor force is normal in the early stages of a recovery, as job seekers who had previously given up hope start to look actively for work again,” he said. “Nevertheless, the size of the jump in April is out of all proportion and we wouldn’t be surprised to see a partial reversal in May’s figures.” According to data released earlier this week by the DOL, productivity among the employed labor force increased at a 3.6% annual rate during Q110, with output rising 4.4% and hours worked rising 0.8%. Ashworth noted that rate of increase, though “impressive,” lags the 6% to 7% rates of growth seen in the three previous quarters. “Firms have been amazingly successful in cutting costs during the recession and the early stages of the recovery,” he said. “Unfortunately, we suspect that many of those gains were achieved through one-time savings: closing less productive plants, reducing headcounts, etc.” Ashworth added: “In the second half of this year we expect to see employment rising again, albeit still relatively modestly, while output growth gradually slows.” Write to Diana Golobay.

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