By Steven R. Drexel, President and CEO of Cornerstone Staffing Solutions, Inc.

On Friday May 6, the Bureau of Labor Statistics released its monthly summary of labor market activity for April 2016. The attention-grabbing number was a disappointing increase of 160,000 jobs, while the unemployment rate held steady at 5.0 percent. Economists, who form their predictions based on a number of factors, had expected an employment increase of around 200,000, more in line with the 208,000 (revised) increase reported for March. The slower rate of growth is disappointing, and will serve to confirm the narrative that the broader economy has slowed during recent months as was evident in last week’s announcement that Gross Domestic Product (GDP) growth was only 0.5 percent during the first quarter of 2016. Other softer results included the observation that the labor force participation rate declined slightly to 62.8 percent, indicating that fewer unemployed workers were actively seeking employment during April. Additionally, of the 262 industries reported, a smaller percentage were growing as this metric declined from 58.6 percent to 56.3 percent.

The Bad News
The substandard jobs increase, could foreshadow a change in the trajectory of growth I’ve advocated, but it is worth noting that 2015 was overall, a good year for employment growth, and yet, it included three months in which employment grew at a slower rate than April’s 160,000 increase. Furthermore, generally, an increase of 100,000 is enough to absorb new entrants into the working age population, so the 160,000 is more than adequate to sustain an expansion.

The Good News
Encouraging elements of the report included the fact that average hourly earnings improved to provide a welcome and improved 2.5 percent year-over-year increase. Moreover, the average workweek edged up one tenth of an hour to 34.5. With more people working, a slightly longer workweek and earning more per hour – the combined result is favorable for retail sales and continued slow but steady economic growth.
Looking at the industries that had the biggest contributions to the change in employment it is apparent that most of the weakness was related to construction, retail trade and government. Construction was unusually strong during the mild winter and retail trade could be skewed by the earlier observance of Easter this year. Mining and energy related industries remained weak as expected due to still depressed oil prices. On the other hand, professional and business services as well as financial services and education and health services reported strong results. Overall, the ‘by industry’ details were reassuring.

The Outlook
In summary, April’s job growth was unexpectedly weak and the labor force contracted which stunted growth. GDP growth was weak during the first quarter as well so the April jobs report raises some concerns. All things considered, this is more likely to be a pause rather than a dramatic shift in the economic outlook. The economy weathered riskier conditions during the latter part of 2015 and stayed on track. Initial jobless claims remain in favorable territory and wage growth is increasing. Expect job increases to return to the 200,000 per month trend rate and the unemployment rate to trend slowly down during the summer. Talent is increasingly scarce and more expensive. The expansion remains on track despite April’s sour note.
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More about Cornerstone Staffing Solutions
Cornerstone Staffing Solutions is among the top 120 largest staffing firms in America, as ranked by Staffing Industry Analysts. Since 2003, Cornerstone has grown from a neighborhood staffing provider to a $100 million national firm that employs thousands of people at hundreds of companies from California to Connecticut. Providing candidate searching and job placement for administrative, industrial, technical, sales and transportation positions, Cornerstone truly is where talent and jobs meet. Visit us at: www.cornerstone-staffing.com.