US job machine keeps on cranking
Employers added 253,000 workers, unemployment rate dipped to 3.4 percent
The US job market just won’t quit.
The economy has created 4.7 million jobs since the Federal Reserve began jacking up interest rates in March 2022. While the Fed’s main lending rate has increased by 5 percentage points, unemployment is lower than it was before COVID.
The latest evidence of resilience: Employers added 253,000 jobs in April, the Labor Department said on Friday, and the jobless rate dipped to 3.4 percent from 3.5 percent the previous month.
The report shows that the economy remains in good shape even as many forecasters expect a recession over the next 12 months. So far, employers haven’t been overly spooked by those forecasts, a possible cut in bank lending, or the prospect of the US government defaulting on its debt.
It also underscores Fed chair Jerome Powell’s view that despite some easing in inflation, the tight job market means it’s unlikely that the central bank can start reducing interest rates any time soon. He also reiterated that a recession wasn’t inevitable.
The Fed raised rates again on Wednesday — by a quarter of percentage point — and signaled that it may pause to see whether the effects of its actions, and turmoil in the banking industry, will further slow growth in consumer prices. It’s walking a fine line: tightening credit to cool the economy without tightening too hard and causing millions of job losses.
Friday’s report included signs that the job market is losing steam.
The Labor Department revised downward its estimate for new jobs in February and March. Hiring slowed to an average of 285,000 jobs a month this year from 354,00 in the last six months of 2022. Employment was little changed in construction, manufacturing, and wholesale trade and retail trade in April.
And the labor force, or the number of people with a job or looking for one, declined. However, participation by workers in the key 25-54 age segment rose.
“There’s no doubt that the labor market is still strong, but there has been a slight slowdown this year,” said Daniel Altman, chief economist at staffing firm Instawork.
Investors cheered the jobs news, sending stock prices sharply higher after four straight days of losses driven by falling bank stocks.
“For now, this report is another sign that the Fed hasn’t broken the economy yet,” Callie Cox, a US investment analyst at financial services firm eToro, told Bloomberg.
Other highlights of the report:
■ Employment continued to move higher in professional and business services, health care, leisure and hospitality, and social assistance.
■ Growth in average hourly wages ticked up to 4.4 percent from a year ago after easing in March. “Wage growth remains elevated and well above a rate that would be consistent with the Fed’s 2 percent inflation target,” said Lydia Boussour, senior economist at consulting firm EY-Parthenon.
■ The jobless rate among Black Americans fell to 4.7 percent in April, its lowest level ever. The gap in employment between Black workers and white workers is now the smallest on record.
A healthy job market is good news. But it complicates the Fed’s efforts to take the air out of inflation, which continues to run at unhealthy rates.
The waiting game continues.