See Why Job Creation is the Largest in Eleven Months

The unemployment rate for April rose to 9.0% from the previous month’s 8.8%. The consensus was for 8.8% and their own estimate was for 8.9%.

The spike in the unemployment rate, however, was overshadowed by the impressive 244,000 increase in the nonfarm payroll, which blew past the consensus expectation of 185,000. This increase in job creation is the largest in 11 months. Likewise private sector payrolls rose 268,000, beating the consensus expectation of 200,000. this is the largest gain since February 2006. Today’s report is an encouraging sign that the economic recovery remains on track.

Here is the lead paragraph from the Employment Situation Summary released this morning by the Bureau of Labor Statistics:

Nonfarm payroll employment rose by 244,000 in April, and the unemployment rate edged up to 9.0 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in several service-providing industries, manufacturing, and mining.

The unemployment peak for the current cycle was 10.2%, one year ago in October 2009. The chart here shows the pattern of unemployment, recessions and both the nominal and real (inflation-adjusted) price of the S&P Composite (NYSE:SPY) since 1948.

Unemployment is usually a lagging indicator that moves inversely with equity prices (See first chart below). Note the increasing peaks in unemployment in 1971, 1975 and 1982. The inverse pattern becomes clearer when viewed against real (inflation-adjusted) S&P Composite, with its successively lower bear market bottoms. The mirror relationship seems to be repeating itself with the current and previous bear markets.


The second chart shows the unemployment rate for the civilian population unemployed 27 weeks and over. The March number is 4% — down from December’s adjusted 4.1%. This measure gives an alternate perspective on the relative severity of economic conditions. As we readily see, this metric is significantly higher than the peak in 1983, which came six months after the broader measure topped out at 10.8%.


The third chart is one of my favorites from CalculatedRisk. It shows the job losses from the start of the employment recession, in percentage terms compared to all recessions since 1948. Note the addition of the dotted-line alternative for the current cycle, which shows unemployment excluding the temporary census hiring.

Job Losses

The start date of 1948 was determined by the earliest monthly unemployment figures collected by the Bureau of Labor Statistics. The best source for the historic data is the Federal Reserve Bank of St. Louis.

Here is a link to a Google source for customizable charts on US unemployment data (not seasonally adjusted) since 1990. You can compare unemployment at the national, state, and county level.

Doug Short Ph.d is the author of

Learn More with Econ 101: Your Ultimate Cheat Sheet to Unemployment Numbers >>