Smallest US job gains in 7 months temper rate hike hopes

SILVER LININGS: There were some silver linings in the report, with both average hourly earnings and the average work week rising.

Average hourly earnings increased eight cents or 0.3 per cent. That took the year-on-year increase to 2.5 per cent from 2.3 per cent in March, still below the 3.0 per cent advance that economists say is needed for inflation to rise to the Fed’s 2.0 per cent target.

The average work week increased to 34.5 hours from 34.4 hours in March. The 0.4 per cent increase in aggregate hours and higher earnings left workers with a 0.7 per cent increase in their take-home wages, which should support consumer spending.

Economists said the moderation in job creation was not surprising, citing weak business investment and a shortage of skilled workers in areas like construction.

“Without business growth and development, there is little support for robust job creation. This morning’s report suggests we may already be seeing early signs of at least a modest slowdown in the pace of employment,” said Lindsey Piegza, chief economist at Stifel Fixed Income in Chicago.

Other economists saw the slowdown in employment last month as payback for mild winter weather, which had seen strong hiring in retail and construction sectors in the first quarter.

Details of the smaller household survey from which the unemployment rate is derived were mostly weak.

The labour force participation rate, or the share of working-age Americans who are employed or at least looking for a job, fell 0.2 percentage point to 62.8 per cent. It had increased 0.6 percentage point since dipping to 62.4 per cent in September. The labour force fell by 362,000 as people dropped out in April. The labour force had increased 2.4 million in the prior six months.

The employment-to-population ratio fell to 59.7 per cent in April from a sevenyear high of 59.9 per cent in March. But a broad measure of unemployment that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment slipped onetenth of a percentage point to 9.7 per cent last month.

The larger establishment survey showed the vast private services sector dominated employment gains in April, adding 174,000 jobs. Retail payrolls fell 3,100 last month after hefty gains in the first quarter, which came despite sluggish sales.