U.S. jobless rate falls below 4% for first time in nearly two decades

The nation’s red-hot job market fell below 4% for the first time since the waning days of former President Bill Clinton administration nearly 20 years ago. The drop was aided by a monthly average of more than 205,000 workers added to America’s brimming labor pool in the first four months of 2018, the U.S. Department of Labor reported Friday (May 4).

In the nation’s monthly job market snapshot for April, the Labor Department’s Bureau of Labor Statistics (BLS) reported that the U.S. jobless rate had fallen to 3.9% for the time since December 2000 after remaining fixed at 4.1% for the sixth straight months, adding a lower-than-expected 164,000 workers to U.S. payrolls.

That is a still a brisk rebound from the revised 135,000 job additions in March, following 200,000 and 326,000 nonfarm positions added to U.S. payrolls in January and February, respectively. Wall Street economists had forecasted the nation’s brimming labor pool to see a 184,000-employee increase in April, bringing the monthly average in 2018 to an 206,250.

The “U-6” jobless rate, which includes those “marginally” attached to the labor force and persons employed part-time but seeking full-time work, was 7.8%, down from 8% in March and slightly below year ago levels at 8.1%. Some economists point to the U-6 number as a better and broader measure of the economy with respect to jobs.

The U.S. jobless rate touched hit its highest level in 20 years in October 2009, when it peaked at 10% in the first year of former President Barack Obama’s presidency amid the Great Recession following the 2008 financial crisis.

Although upbeat, some economists and job market watchers believe the nation’s labor pool could be entering risky territory as employers are finding it more difficult to find skilled professional and technical workers to fill key positions in growing industries.

On Thursday, the highly-watched ADP National Employment Report, which measures the change in total nonfarm private employment each month on a seasonally-adjusted basis, showed that private sector employment increased by 204,000 jobs from March to April.

“The labor market continues to maintain a steady pace of strong job growth with little sign of a slowdown,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “However, as the labor pool tightens it will become increasingly difficult for employers to find skilled talent. Job gains in the high skilled professional and business services industry accounted for more than half of all jobs added this month.  The construction industry, which also relies on skilled labor, continued its six month trend of steady job gains as well.”

Mark Zandi, chief economist of Moody’s Analytics, added: “Despite rising trade tensions, more volatile financial markets, and poor weather, businesses are adding a robust more than 200,000 jobs per month. At this pace, unemployment will soon be in the threes, which is rarified and risky territory, as the economy threatens to overheat.”

There is now only a one percentage point spread between the Arkansas and U.S. jobless rate. Two weeks ago, the state Department of Workforce Services reported Arkansas’ seasonally adjusted unemployment rate edged up to 3.8% as the state’s civilian labor force declined 1,521 between months, a result of 1,879 fewer employed and 358 more unemployed Arkansans.

Nationwide, the number of unemployed persons also edged down by 300,000 workers between months to 6.3 million workers. Among the major worker groups, the unemployment rates for all major categories fell in April from the previous months. Among the major worker groups, the unemployment rate for adult women decreased to 3.5% in April. It held steady at 3.7% for adult men, teenagers (12.9%), Whites (3.6%), Blacks (6.6%), Asians (2.8%), and Hispanics (4.8%).

The number of long-term unemployed, or those jobless for 27 weeks or more, was little changed at 1.3 million in April and accounted for 20% of the unemployed. The labor force participation rate was 62.8 for the month and the employment-population ratio held steady at 60.3%.

Among the 164,000 job additions in April, employment in in professional and business services increased by 54,000. Over the past 12 months, the industry has added 518,000 jobs. The surprising manufacturing sector grew by another 24,000 jobs month-to-month, with most of the increase from the durable goods industry’s blue collar-focused machinery and fabricated metals sectors. Manufacturing employment has risen by 245,000 over the year.

The robust health care sector also added 24,000 jobs in April and 305,000 jobs over the year. Employment in other mining, which includes the oil and gas sector, increased by 8,000 at the end of the first four months of 2018. Mining employment has risen by 86,000 since a recent low in October 2016.

Employment changed little over the month in other major industries, including construction, wholesale trade, retail trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in April. In manufacturing, the workweek rose by 0.2 hour to 41.1 hours; overtime edged down by 0.1 hour to 3.7 hours.

Average hourly earnings for all employees on private nonfarm payrolls rose by four cents to $26.84. Over the year, average hourly earnings have increased by 67 cents, or 2.6%. Average hourly earnings for private-sector production and nonsupervisory employees increased by five cents to $22.51 in March.

The change in total nonfarm payroll employment for February was revised down from 326,000 to 324,000, and the change for March was revised up from 103,000 to 135,000. With these revisions, employment gains in February and March combined were 30,000 more than previously reported.