The U.S. unemployment rate fell in April to the lowest lowest point in 10 years, according to Labor Department data released Friday. The unemployment rate dropped one-tenth of a percentage point to to 4.4 percent, the lowest number recorded since May 2007. While the decrease is significant, economists say the official unemployment rate isn’t the north star metric when it comes to U.S. job growth.
The official unemployment rate, also known as the U-3 rate, doesn’t take into account the broader scope of unemployment nationwide. Another measure, the U-6 rate, is defined as all “unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.” The U-6 rate fell to 8.6 percent in April and remains higher than its pre-recession level.
According to the Labor Department report, nonfarm payrolls jumped by 211,000 jobs last month compared to 79,000 in March. The industries with the most growth include leisure and hospitality, healthcare and social assistance and business and professional services.
Payroll gains also rebounded in April, however the 2.4 percent year-over-year gain in average hourly earnings is still the weakest since August. The Bureau of Labor Statistics reported earlier last month that average hourly earnings were up from a year ago, and national hourly earnings for the month increased 2.73 percent or $0.68, to $25.67.
The tightening labor market could spur the Fed to raise the interest rate next month. The U.S. central bank kept the benchmark interest rate unchanged earlier this week, saying it expected labor market conditions would “strengthen somewhat further.”
“Labor market conditions remain robust and continue to tighten,” said Ward McCarthy, chief financial economist at Jefferies LLC in New York. “This data will keep the Fed on track for a preferred 2017 normalization timeline of rate hikes in June and September and the first step toward balance-sheet normalization in December.”