U. S. ECONOMY ADDS HEALTHY 211,000 JOBS
Unemployment declines to 4.4%, but wages increase less than expected
The labor market bounced back amid milder weather as employers added 211,000 jobs in April, providing evidence that weakness the prior month was a blip that probably won’t keep the Federal Reserve from raising interest rates in June.
The unemployment rate, which is calculated from a different survey, fell from 4.5% to 4.4%, a 10- year low, the Labor Department said Friday.
Economists had expected 190,000 job gains, according to the median estimate of a Bloomberg survey. Businesses added 194,000 jobs. Federal, state and local governments added 17,000.
Job gains for February and March were revised down a combined 6,000. February’s was revised up to 232,000 from 219,000, while March was weaker than thought after a downgrade to 79,000 from 98,000.
Average hourly wages, however, increased less than expected, rising 7 cents to $ 26.19 and pushing down annual gains to 2.5% from 2.7% the previous month. While pay increases have accelerated, the Fed is watching for a faster pickup as a sign of sharper inflation, cementing its plan for two more interest rate hikes this year.
Employers are expected to raise salaries more sharply as the low jobless rate forces them to bid up to attract fewer available workers.
The falling jobless rate is likely to soon put more upward pressure on wages, possibly coaxing the Fed to hoist rates more rapidly. Ian Shepherdson, chief economist of Pantheon Macroeconomics, expects the Fed to raise rates in June and again in September.
Steve Rick, chief economist of CUNA Mutual Group, said many employers that are on the fence about hiring are likely pulling the trigger because they don’t want to lose job candidates to competitors in the tight labor market.
“There’s a huge opportunity cost to not hiring,” he says. “( Some) firms are hoarding workers.”
Brian Bethune, chief economist of Alpha Economic Foresights, said April’s job growth points to a strong rebound in economic growth in the second quarter after the economy expanded at an anemic 0.7% annual rate the first three months of the year.
An encouraging sign is that a broader measure of unemployment — which includes not only the unemployed but discouraged workers and part- timers who prefer full- time jobs — fell to 8.6% from 8.9%.
Goldman Sachs expected April’s more favorable temperatures to spur pent- up hiring in some areas hurt by March’s foul weather, boosting overall payroll additions by 25,000 to 40,000.
Leisure and hospitality, for example, led the payroll gains with 55,000. Professional and business services added 39,000; health care 37,000; manufacturing, 6,000; and construction, 5,000.
Retail payrolls grew by 6,300 after losing jobs each of the prior two months. Retailers have been laying off workers as more Americans shop online, a dynamic Goldman said will drag down monthly job growth by an average 10,000 or so in the months ahead. Retailers added 58,000 jobs the past year, down from an average of nearly 275,000 in each of the prior two years.