Do not put too much into monthly employment data. It's possible to drill down the numbers and find reasons to discount the 138,000 gain in employment -- a weird reduction in retail employment despite same-store sales gains, a gain in manufacturing -- but the best reason to relax about the number is that the general trend is still up. The chart below is a 12-month net change chart for jobs since 2003. We have been adding 2 million jobs a year since third quarter 2004, and the squiggles and wiggles since then are simply not worth the bother to tease out further.



Growth of the number of people employed was slow, not just for April but with some downward revisions to the February and March numbers. But if you are going to say that output is slowing down in the second quarter you would need to consider the aggregate number of hours worked:



Since it is hours that interacts with capital and productivity to give us output, I wouldn't back off the GDP forecasts just yet.

The increase in wages that some are pointing to as a cause for thinking the FED will act more decisively against inflation were to be anticipated by that productivity report. I'm still in a 5.25% frame of mind.