Hiring in the US slowed in April with the workforce adding another 175,000 jobs and wage growth slowing.
The news cheered investors hoping that a cooling labor market will prompt the Federal Reserve to cut interest rates – which have been driven to a 20-year high as the US fights stubbornly high inflation. All the major US markets rose on the news.
Last month, the labor department reported the US added a revised 315,000 jobs in March, far higher than the 192,000 jobs economists had forecast. April’s figure was lower than forecast and the unemployment rate ticked up from 3.8% to 3.9% over the month but the figures underlined the continuing strength of the jobs market.
It was the 40th straight month of job gains in the US and the 27th consecutive month with the unemployment rate below 4% – the longest such streak since 1953.
Gains were broad-based, with healthcare, social assistance, transportation and warehousing, manufacturing and construction all adding jobs.
The growth in the jobs market has continued even as the Fed has maintained its rates policy. The Fed said this week that inflation remained high and that it did not plan to cut interest rates until it has “greater confidence” that price increases are slowing to the goal of 2%. Jerome Powell, the Fed chair, said the slowdown in price increases was taking longer than expected, but that he expected inflation to “move back down” this year.
Wage gains in April – which are also closely watched by the Fed – were also lower than forecast, increasing 3.9% from a year earlier after rising 4.1% in March.
“Despite missing expectations, signaling an economic cooldown, the labor market has still maintained a pattern of growth and consumers can be cautiously optimistic that the Fed will be able to successfully lower inflation while also avoiding a recession,” said Steve Rick, chief economist at TruStage.
ADP, the US’s largest payroll supplier, reported this week that private sector employment was up 192,000 jobs in the month of April and that annual pay was up 5% year-over-year.
“Hiring was broad-based in April,” said Nela Richardson, chief economist at ADP. “Only the information sector – telecommunications, media, and information technology – showed weakness, posting job losses and the smallest pace of pay gains since August 2021.”