US job growth rebounds
washington — US job growth rebounded sharply in April and the unemployment rate dropped to 4.4 per cent, near a 10-year low, pointing to a tightening labour market that could seal the case for an interest rate increase next month despite moderate wage growth.
Non-farm payrolls surged by 211,000 jobs last month, the Labour Department said on Friday, well above the monthly average of 185,000 this year and a jump from the gain of 79,000 in March.
The job gains were broad-based, with hefty increases in leisure and hospitality, healthcare and social assistance as well as business and professional services.
The drop of one-tenth of a per centage point in the unemployment rate took it to its lowest level since May 2007. The decline reflected both an increase in hiring and people leaving the labour force.
“With continued solid job growth, the US economic expansion will continue throughout 2017. The Fed will raise the federal funds rate again in mid-June as the economy is approaching full employment,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh.
The rebound in hiring supports the Federal Reserve’s contention that the pedestrian 0.7 per cent annualised economic growth pace in the first quarter was likely “transitory,” and its optimism that economic activity would expand at a “moderate” pace.
The US central bank on Wednesday kept its benchmark overnight interest rate, or federal funds rate, unchanged and said it expected labour market conditions would “strengthen somewhat further.”
The Fed raised rates by a quarter of a percentage point in March and has forecast two more increases this year. Prices of US government debt fell after the employment data while US stock index futures rose. The US dollar initially gained against a basket of currencies before turning flat.
Average hourly earnings rose seven cents, or 0.3 per cent, last month, partly because of a calendar quirk. While that lowered the year-on-year increase to 2.5 per cent, the smallest since August 2016, there are signs that wage growth is accelerating as labour market slack diminishes.
Average hourly earnings increased 2.6 per cent in March. A government report last week showed private sector wages recorded their biggest gain in 10 years in the first quarter. — Reuters