US Employment Surprise, but is it Good Enough?

The US jobs report offered a pleasant surprise after the string of mostly disappointing data. Private sector employment rose 165k and the Feb and March series were revised up by 114k jobs. The 3-and 6-month averages now stand at 215/216k. The unemployment rate fell to 7.5%, the lowest since December 2008.

The one aspect of the report that was disappointing and really undermines the impact of the headline strength is that the work week fell by 0.2 hours. Given the 135 mln or so workers, a cut 12 minute reduction in the average work week translates into a loss of output of hundreds of thousands of full time equivalents. The impact then on output may be less than the larger than expected rise may suggest. This may also impact spending even though hourly earnings rose 0.2%. 

The reduction of the average work week appears to be a function of an increased number of part time jobs. The number of people "involuntarily" taking part time work rose 278k to 7.64 mln. 

The unemployment rate, as is well appreciated, is a function of the household as opposed to the establishment survey. The household survey reported 293k new jobs in April, the best since last October. The three month average from the household survey is 86k. There is often a gap between the two surveys, but is unusually wide.

The euro, which was coming off prior to the jobs report, on the back of clarification of the negative deposit rate talk earlier extended its losses and barely slipped through yesterday's low before stabilizing. Sterling also extended yesterday's losses below $1.55 but also appears to have stabilized. The sharp backing up of US yields helped lift the greenback above JPY99 for the first time this week.