U.S. employers increased their payrolls by 175,000 in April – a notable slowdown from the average of 276,000 new jobs created per month so far this year.
Last month’s pace of hiring marked a tonal shift from the recent labor market trend, where resilience has bolstered the Federal Reserve’s argument that interest rates aren’t quite ready to be reduced.
The April job growth figure fell short of the 240,000 jobs predicted by analysts, suggesting the possibility that the economy is headed for a slowdown worthy of an interest rate cut.
The closely watched jobs report also showed the unemployment rate rose to 3.9%, up from the previous month’s rate of 3.8%.
The Dow Jones consensus forecast that unemployment would remain unchanged.
April was the 27th consecutive month that the unemployment rate remained below 4%.
March’s impressive 303,000 gains were revised upward by 12,000 to a total of 315,000, and the Labor Department slightly revised February’s 270,000 additional positions, lowering them by 34,000, to 236,000. , Friday.
The April jobs report showed strong hiring, mainly in the health care, welfare and transportation sectors.
Retail employment also continued its upward trend, while construction and government jobs saw no notable increases, according to the Bureau of Labor Statistics.
The resilience of the labor market in recent months has been one of the most striking signs of persistently high inflation.
Historically, a strong labor market keeps wages and consumer spending high, fueling inflation and interest rates.
The latest economic data clouds the path forward for Federal Reserve Chairman Jerome Powell, who said on April 16 that “given the strength of the labor market and the progress made on inflation thus far , it is appropriate to allow more time for restrictive policy to act and to let data and evolving perspectives guide us.
The Federal Interest Rate Setting Committee opted to keep the benchmark federal funds rate stable – in the highest range the U.S. economy has seen in more than two decades – at the end of its latest meeting two days, Thursday.
At an afternoon news conference, Powell downplayed the possibility of further rate hikes, as recent economic data further boosted central bankers’ confidence that they are seeking lower inflation. .
On Monday, for example, the World Bank warned that the days when energy and other commodities served as a deflationary force may be coming to an end, citing geopolitical tensions that have put pressure on demand for oil, industrial metals and other supplies.
A day later, the Labor Ministry said the Employment Cost Index (ECI) – which measures workers’ pay and benefits – had increased just 1.2% over the three first months of this year.
This figure, which traditionally signals underlying inflationary pressures, was also higher than the 0.9% increase recorded in the fourth quarter of 2023.
The latest warning signs cast further doubt on the Fed’s ability to curb inflation to its 2% target by the end of the year.
To bring down inflation from its peak of 9.1% reached in the summer of 2022, central bankers announced a series of 11 rate hikes in a bid to calm the economy, bringing borrowing rates to their current high for 23 years, between 5.25% and 5.5%. .
The April CPI is scheduled to be released on May 15.
When inflation persists as it has, the Fed has always raised interest rates even more.
New York Post
