The US job market keeps on generating good news. The unemployment rate fell to 3.6% in April, the lowest since 1969, according to data published today.
Last month, the number of unemployed people declined by 387,000, to 5.8 million. There were notable job gains in professional and business services, construction, health care, and social assistance.
The US recorded its 103rd consecutive month of job gains, extending a record-breaking streak. In April, employers added 263,000 jobs, beating expectations and bringing the monthly average for 2019 to a robust 218,000.
Until recently, the job gains weren’t translating into meaningful wage growth. In April, average hourly earnings for all employees rose 3.2% from a year ago. For production and non-supervisory employees in the private sector, the bulk of the US workforce, wages rose 3.4% from a year ago. That was the ninth consecutive month of annual wage growth above 3%, something that hasn’t happened since 2009. Wages have also been boosted by a falling inflation rate, which gives workers more purchasing power.
The historically low unemployment rate and accelerating wage growth are worth cheering, but it doesn’t necessarily mean that all is well in the US job market.
The official rate of unemployment has a narrow definition, including only people who are actively looking for work. Once “discouraged workers” are included, the rate rises to 3.9% (matching the lowest level since at least 1994). Add people “marginally attached” to labor force, who want to work and have looked for a job in the past year (but not the past month), and the rate rises to 4.4% (the lowest since at least 1994). Include people working part-time who would rather work full-time, and the unemployment rate for April would be 7.3% (the lowest since 2001).
Meanwhile, the decline in the main unemployment rate coincided with a 0.2 percentage point decline in the labor force participation rate, to 62.8%. The share of people working or actively looking for work has barely budged in the past seven years. It reached a peak of 67.3% in 2000. The US labor market is strong, but it could still be even stronger.