U.S. Jobs Continue to Grow in April, But Is the Market Primed to Overheat?
The jobs market continues to boom — but how long will it last?
The U.S. economy added 204,000 new jobs in April, according to the most recent ADP National Employment Report. The majority of growth came from hiring in the service sector, as in months past, but the jobs market did also see continued performance from goods-producing companies. April represents a mild downturn from the surge seen in March.
According to ADP's analysis, April is the 97th consecutive month of jobs growth for the US economy, making this one of the most successful periods for jobs growth in American history. The level of hiring has varied greatly, but the overall direction of the U.S. economy has been uniformly upward — for eight years straight.
Service Sector Hiring is the Key to the Ongoing Hiring Boom
Leisure and hospitality payrolls surged by 36,000 in April, greatly exceeding the average of about 26,000 new jobs set over the preceding year. The professional and business services industry also remains a key engine of service sector growth, adding 58,000 jobs in April. Over the past two years, this industry has shown continued, impressive growth with an average of nearly 40,000 jobs added each month.
Education and health care saw another solid performance in April, making it easily one of the most stably-performing industries in the entire U.S. economy. The industry added 39,000 jobs in April, the same number it added each month over the past year, on average. While other industries have wavered in hiring, education and health care services have persisted through it all.
Meanwhile, health care services companies added 35,000 jobs; health care companies haven't added fewer than 25,000 jobs per month in four years and, even then, in March 2014, it added 16,000 jobs.
Construction, Manufacturing Continue to Grow
This month's National Employment Report also shows that the less ballyhooed goods-producing industries performed well enough to warrant mention. Construction continued its ascent with 27,000 new jobs, and manufacturing firms added 10,000 new workers to their payrolls. With an overall gain of 44,000 jobs, production added its fair share to American prosperity last month.
In April, Small Business Returns to the Fore
April saw small businesses (fewer than 50 employees) add 62,000 new jobs, shaking off a relatively weak March to keep the overall economy growing at a steady rate. This offset the deceleration in hiring from midsized employers (50-499 employees), which added 88,000 jobs. This is compared to 120,000 jobs added in March, and 101,000 in February. Large businesses also saw a dip in hiring, bringing in 54,000 jobs compared to an average of 77,000 jobs added over each of the three months before.
The downturn in large business and midsized business hiring is likely due to insecurity about investing on the international scale, particularly with uncertainty about large-scale trade agreements and potential international strife in Asia and the Middle East. Reuters reports these worries are, at least partially, being borne out. Small business growth, being based much more in local concerns, can be attributed to the continuing stability of the U.S. market in isolation, reports Financial Post.
As a result of increasing worries about the stability of the international market, and decreasing worries about the stability of the domestic one, every size of business contributed meaningfully to April's showing.
The Economy has a Cool Coming up, but it's far From Cold
Mark Zandi of Moody Analytics said on May 2 that the sustained growth seen in the U.S. jobs market could lead to an unemployment rate below 4 percent, which he deems "rarefied and risky territory." As reported two days later by the Bureau of Labor Statistics, we are already there with unemployment at 3.9 percent. The danger, Zandi said, is that the economy could "overheat," creating a situation in which inflation rises and over-production leads to a rebound in the opposite direction. Widespread opinion seems to be that the current period of growth is unlikely to continue at the present rate for much longer.
