U.S. employers increased payrolls by 175,000 jobs in April, a marked slowdown from the average of 276,000 new jobs created per month so far this year.
Last month’s hiring pace signals a change from recent trends in the labor market and supports the Fed’s argument that resilience is not yet ready for rate cuts.
Job growth in April was lower than the 240,000 jobs expected by analysts, suggesting the economy could be headed for a slowdown worthy of interest rate cuts.
The closely watched employment report also showed that the unemployment rate rose to 3.9% from 3.8% the previous month.
The Dow Jones Consensus expected the unemployment rate to remain unchanged.
April marked the 27th consecutive month that the unemployment rate remained below 4%.
March’s impressive increase of 303,000 jobs was shockingly increased by 12,000 to a total of 315,000, with the Labor Department on Friday adding 270,000 additional roles in February to 34,000 fewer roles. The number has been revised slightly to 236,000.
April’s employment report showed strong employment across the board, primarily in the health care, social assistance and transportation industries.
According to the Bureau of Labor Statistics, retail employment also continues to trend upward, but there were no notable increases in construction or overall government employment.
The hold-up in the labor market in recent months has been one of the most visible signs that inflation will remain high for a long time.
Historically, a strong job market keeps wages and consumer spending levels rising, which in turn fuels inflation and interest rates.
The latest economic data leaves Federal Reserve Chairman Jerome Powell’s path forward unclear, but on April 16, Powell said, “Given the strength of the labor market and historical developments in inflation, It is then appropriate to allow more time for restrictive policies to take effect and let the data dictate.” And an evolving outlook will guide us. ”
The Federal Open Market Committee, which decides interest rates, concluded its latest two-day meeting on Thursday, opting to keep the benchmark federal funds rate unchanged at the highest level for the U.S. economy in more than 20 years.
In an afternoon press conference, Chairman Powell downplayed the possibility of further rate hikes, saying recent economic data had not yet convinced central bank officials to expect inflation to fall.
For example, the World Bank said on Monday that the days of energy and other commodities being deflationary could be nearing an end, as geopolitical tensions are weighing down demand for oil, industrial metals and other supplies. I warned you that it’s sexual.
Just one day later, the Labor Department announced that the Employment Cost Index (ECI), which measures worker compensation and benefits, rose by just 1.2% in the first three months of this year.
This measure, which traditionally signals underlying inflation pressures, was also higher than the 0.9% rise experienced in the fourth quarter of 2023.
Recent warning signs cast further doubt on the Fed’s ability to push inflation to its 2% target by the end of the year.
To bring inflation down from a peak of 9.1% in summer 2022, the central bank has implemented 11 consecutive interest rate hikes to cool the economy, raising borrowing rates to 5.5% from the current 23-year high of 5.25%. raised to. .
The April CPI is scheduled to be released on May 15th.
If inflation continues, the Fed has historically raised interest rates further.
