The labor market continued to show remarkable strength in April, adding 253,000 jobs as the unemployment rate slipped to a level not seen in more than 50 years, the U.S. Bureau of Labor Statistics reported Friday.
The number of jobs added in April was 40.5% above Wall Street estimates of 180,000 jobs added, but was about 13% below the average of 290,000 for the previous six months.
The unemployment rate slipped from 3.5% in March to 3.4% in April, a level not seen since 1969, the bureau said. The rate has held in a narrow range of between 3.4% and 3.7% since March 2022.
Employment continued to trend up in professional and business services (+43,000 jobs), health care (+40,000), leisure and hospitality (+31,000), and social assistance (+25,000).
Employment in financial activities increased by 23,000 in April, with gains in insurance carriers and related activities (+15,000) and in real estate (+9,000).
Average hourly earnings rose by 16 cents to $33.36, an increase of 0.5% from March and up 4.4% from a year ago. Both increases were higher than expected.
More Work For The Fed?
Realtor.com Chief Economist Danielle Hale said the results seem to show the Federal Open Market Committee — which announced a 25-basis-point increase in its benchmark rate on Wednesday, its 10th increase in the past 14 months — still has more work to do to bring inflation down to its 2% goal.
“In the May Fed meeting statement, … the committee removed guiding language about additional policy firming being necessary. In other words, they opened the door to the possibility of a pause in June,” Hale said. “[The] data is the first piece of additional evidence that will factor into June’s decision, and it certainly bolsters the case for those who expect there is still more for the Fed to do.”
She said the job data won’t have the final say, “but this information will raise market odds of another rate hike in June, at least until another piece of data contradicts it.”
She noted that wage growth has “generally moderated since April 2022, when it registered 5.9%, but still remains above pre-pandemic trends, when wage growth peaked at 3.6%. In fact, trends for production and nonsupervisory workers suggest that, excluding the wildest swings early in the pandemic, current wage growth is still higher than it has been at any other time since 1982.”
Hale said a strong job market will boost earnings and household spending capacity, “which is good for the housing market and broader economy. However, a too-strong market means the Fed has to tighten further, dampening that good news and running a higher risk of over-tightening.”
Mike Fratantoni, senior vice president and chief economist for the Mortgage Bankers Association, also said the jobs report is likely not what the Fed wanted to see.
“A solid job market will provide support to the housing market,” he said. “However, the inflationary pressures from this strong wage growth will likely prevent the Federal Reserve from cutting rates anytime soon, even if they now are at the peak for this rate cycle.”
