The US GDP grew at an annual rate of 2.5% in the first quarter of 2013, driven by strong growth in consumer spending and business investment in inventories. The US jobs report for April 2013 showed an addition of 165,000 jobs, revised upward from previous months. While this signals continued slow improvement in the jobs market, some signs of caution remained such as a decline in average work hours. The unemployment rate held steady at 7.5%.

1. Economic Update
May 2013
David Garson
Major Account Executive

2. 1st Qtr. GDP: 2.5% (Initial Estimate)
Sources: Wall Street Journal, Bureau of Economic
Analysis
Five Takeaways From Jobs Report (Wall Street Journal)
2012 2013
Components of GDP 1st 2nd 3rd 4th 1st
Consumers 1.72% 1.06% 1.12% 1.28% 2.24%
(Personal Consumption)
*Businesses
0.78% 0.09% 0.85% 0.17% 1.56%(Gross Private Domestic
Investment)
Net Exports 0.06% 0.23% 0.38% 0.33% -0.50%
(Exports-Imports)
Government -0.60% -0.14% 0.75% -1.41% -0.80%
Total GDP 1.96% 1.24% 3.10% 0.37% 2.50%
*Inventories
-0.39% -0.46% 0.73% -1.53% 1.03%
component of Business
Sigh of relief. A gain of 165,000 jobs isn’t anyone’s idea of runaway growth, but it should be enough to
calm fears of another “spring swoon” (a narrative we’d questioned yesterday). Moreover, March’s
disappointing gain of 88,000 jobs was revised up to a much less alarming 138,000, and February’s already
strong reading of 268,000 was revised up to a gain of 332,000, the best mark in nearly three years (and the
best mark of the recovery after adjusting for the impact of the 2010 Census). Taken on its own, today’s
report shows a job market that is continuing to make real but discouragingly slow progress; in the context of
recent fears of a more significant slowdown, however, it looks significantly better.
Trend improves. The month-to-month jobs numbers are volatile, and subject to big revisions, so it pays to
look at the longer-term trend. By that measure, today’s report looks even more positive, especially due to
the big upward revisions to February and March’s figures. The revisions pushed the three-month average of
job growth back up over 200,000 — with the revisions, it’s now been there for five consecutive months —
which is a marked improvement from last summer, when the average fell below 150,000 for four months in
a row. Perhaps more significantly, the new numbers help erase a worrying trend of slowing year-over-year
job growth — over the past year, the economy has now added more than 2 million jobs.
Consumers show strength. Retailers added 29,000 jobs in April, more than reversing an unexpected
decline in March, and restaurants and bars added 38,000 jobs. That suggests consumers, who helped carry
the economy in the first three months of the year, remained a source of strength to start the second quarter.
Other sectors were more mixed, however. Construction employment was basically flat after 10 months of
reasonably strong growth, which is made more concerning by this week’s weak report on construction
spending. Manufacturing employment was flat, too, and the government once again cut jobs, although it
may be too early to declare a major impact from the budget cuts known as the “sequester” — the
“professional and business services” sector, which includes many government contractors, added jobs in
April.
Some signs of caution. More people worked in April, but they worked fewer hours per week on average, a
possible sign of caution among employers. Factories similarly cut both regular and overtime hours. And the
number of people reporting they were working part-time because they couldn’t find full-time work rose by
more than a quarter million. There was also a small drop in the number of people starting or re-staring their
job searches, as measured by people who joined the labor force but didn’t yet have jobs. All of that adds up
to some continued signs of caution among both employers and workers, which could reflect the recent
signs of renewed weakness in the economy.
Signs of hope for the long-term unemployed. The number of people out of work for more than six
months fell by 258,000, and the long-term unemployed also fell as a share of all job-seekers. People are
spending less time on average looking for jobs, and on a year-over-year basis, the number of people
reporting they’d given up looking for work because they couldn’t find jobs continued to decline. But it still
remains hard — as of March, less than one out of every 10 long-term job seekers was finding work each
month, versus nearly one in three recent job-losers.

3. Number of people employed as a temporary employee
divided by total non farm payroll employment
Temp Employment
Temporary help services added 30,800 jobs.
Why is the Temp Penetration Rate Important?
“Temporary Help Employment is a Leading Indicator for
Nonfarm Employment—Staffing job trends lead
nonfarm employment by three months when the
economy is emerging from a recession and by six
months during periods of normal economic growth.”
American Staffing Association
Temp Penetration Rate: 1.97% .02% Job Loss/Gain: + 165,00 Jobs Unemployment Rate: 7.5% 0.1%
I
Unemployment Rate: Bachelor’s Degree or higher
Dec Jan Feb March April
3.9% 3.7% 3.8% 3.8% 3.9%
Source: Bureau of Labor Statistics,
American Staffing Association
Nonfarm Payroll –
Job Growth Details
Jobs Added/Lost
Private Sector 176,000
Government Sector -11,000
Total 165,000
Job Losses
Change from Previous
Month
Government -11,00
Construction -6,000
Job Gains
Change from Previous
Month
Professional & Business
Services
73,000
Leisure & Hospitality 43,000
Retail Trade 29,300
Financial Activities 9,000
Manufacturing 0
Education & Health
Services
28,000
- Education 2,700
- Healthcare 19,000
- Social Assistance 7,100

4. Education & Employment, GDP Growth
New York Times
GDP Projections
Survey of Economists (Wall Street Journal)
http://video.cnbc.com/gallery/?vide
o=3000144702&play=1
Unemployment Rate Projections
Survey of Economists (Wall Street Journal)
Source: Wall Street Journal, New York Times
Please note: WSJ Projections were released prior to the BLS report,
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