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US adds jobs, but unemployment rate jumps in April

IT manufacturing and consulting rise

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With the US economy recovering, people are piling back into the job market, as expected, and that is causing the unemployment rate to rise even as the economy added 244,000 net new jobs in April.

The Bureau of Labor Statistics, the part of the US Department of Labor that surveys households and businesses to take the workforce pulse each month, put out its latest jobs report (PDF) this morning, and the news was generally good despite the unemployment rate rising from 8.8 per cent in March to 9 per cent in April. The number of people counted as unemployed – meaning they do not have work and are actively seeking work – remained essentially unchanged from March, at 13.7 million people. The 244,000 gain in the workforce was a bit ahead of the consensus of economists that run their own models, who in aggregate expected something on the order of 185,000 new jobs in April. The BLS also updated its figures for the prior month, as it often does, saying now that 221,000 net new jobs were created in March, up from its original estimate of 216,000.

The additional jobs, while welcome, are still only barely ahead of the estimated 200,000 jobs per month that American firms have to create just to keep pace with population growth. And the economy has to add jobs at a multiple of that pace to actually make a dent in the unemployment rate. The US economy officially entered the Great Recession in December 2007, and over that time the unemployment rate nearly doubled and more than seven million workers were kicked out of work. (Somewhere around 4.5 per cent unemployment is considered the structural unemployment rate in the States, a rate below which it is increasingly hard to get to because people are always changing jobs or taking some time off from work.) The economy had a much easier time shedding jobs than adding them.

The good news in the April jobs report is that the private sector added 268,000 jobs, offsetting declines in local, state, and Federal government payrolls due to budget crunches. This was the largest jump in over five years. The BLS said that retailers added 57,000 jobs in April, and manufacturers added 29,000 jobs. Both have some play in the electronics and IT sectors, since retailers sell PCs and other electronics and manufacturers bake electronic components and assemble machinery and peddle it to users and companies and their resellers. The professional and business services sector added 51,000 jobs last month, the leisure and hospitality industry added 46,000, and the recession-proof healthcare industry added another 37,000 workers.

IT, of course, is one of the careers that spans all industries. Unfortunately, you can't get a direct sense of what is going on in the IT sector from the BLS job report since the bureau does not track jobs by title but rather by industry. But you can get an indirect sense of what's going on among IT-related companies by drilling down into the report.

Manufacturers employed 11.6 million workers in April, and a little less than a tenth of these workers are at companies that make computers and electronic components. Last month, companies making such gizmos added 2,900 workers, or precisely on pace with manufacturers as a whole. Within this sub-group, computer and peripheral equipment manufacturers employed 170,300 people, up 400 from March, and communication equipment makers sent paychecks to 120,000 workers, up 3,000. Employment at semiconductor and electronic component manufacturers actually declined by 400 workers, to 382,800, according to the BLS.

In the information sector of the economy, which includes all manner of media and publishing as well as telecommunications, data processing, and hosting, the results were mixed. Telecom companies shed 5,900 workers, to 866,900, in April, whole those engaged in data processing and hosting added 2,000 jobs, to 240,400.

Employment in IT-related services was on the rise in April, with companies engaged in computer systems design and related services adding a very healthy 14,700 workers. Management and technical consulting services firms – which are not restricted to IT of course but which are often involved in IT projects – added another 14,600 workers. ®

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