US Employer Added 175,000 The Ministry of Labor announced on Friday that it would cut workers’ April salary payments.
The unemployment rate rose to 3.9% from 3.8% the previous month.
Economists had expected payrolls to rise by 240,000 and the unemployment rate to be flat at 3.8% last month. The lower end of the Econoday estimate was 190,000, and the upper end was 303,000.
The weaker-than-expected numbers could reignite hopes for rate cuts this year. Stock futures rose after the employment report was released. Futures markets suggested the Fed could start cutting rates sooner than earlier this week.
The government announced last month that the economy added 303,000 jobs. This was revised upward to 315,000 in the latest report. The forecast for February was revised downward by 5,000 people last month to 270,000. The figure has been revised downward again to 236,000. After the revision, the number of employees in February and March combined decreased by 22,000 from the previous announcement.
Wage increases were suppressed. The overall hourly wage increase rate was 0.2%, lower than the 0.3% expected and lower than the 0.3% recorded in March.
The goods-producing sector of the economy added 14,000 jobs, a sharp slowdown from 39,000 in the previous month, but closer to February’s 15,000. Manufacturing employment increased by 8,000 jobs, nondurable goods manufacturing jobs by 7,000 jobs, and durable goods manufacturing jobs by just 1,000 jobs. The auto sector lost 21,000 jobs, likely reflecting announcements by major U.S. car companies to withdraw from electric vehicle production and self-driving car research.
Employment in the construction sector, a major employment driver, rose by 9,000, according to recent reports, slowing from 40,000 in the previous month.
The service sector added 153,000 jobs, including 20,000 in retail, 21,800 in warehousing and transportation, and 10,000 in wholesale. Employment in the leisure and hospitality industry increased by just 5,000, down from 53,000 in March.
The health and social assistance sector added 87,000 jobs. The government added only 4,000 jobs.
Employment in the information technology sector fell by 8,000. Professional and business services decreased by 4,000 jobs due to a significant 16,400 job decrease in temporary support services.
Total private sector employment increased by 167,000 people.
Over the past three months, the economy grew by an average of 242,000 people. The average number of employees in the private sector is 197,000.
Last December, the Fed said the rate hike was likely due to higher rates, and officials said they expected to cut rates three times in 2024. Bond and derivatives market prices suggest the Fed will cut interest rates as many as six times starting in March. After the Fed surprised many investors in January by indicating it was not ready to cut rates at its March meeting, many investors believed it would start cutting rates at its next meeting in May.
Robust inflation reports for the first three months of the year dashed hopes for an early rate cut. Just before the April jobs report, the market was suggesting there was little chance of a rate cut at the Fed’s next June meeting, with a 1 in 3 chance of a July rate cut and a 61% chance of a rate cut. . The probability of a rate cut in September is 75%, and the probability of a November rate cut is 88%.
After this announcement, the probability of a reduction in July was 42%, the probability of a reduction in September was 74%, the probability of a reduction in November was 84%, and the probability of a reduction in December was 94%.
The Fed typically lowers interest rates when it thinks the economy is deteriorating. Growth last year was very strong, especially in the second half, but economists thought the Fed’s rate hikes from March 2022 to July 2023 would be a big drag on growth and the labor market this year. Instead, the economy is adding jobs at a breakneck pace.
Some Democratic politicians, progressive economists and Wall Street analysts say the Fed is risking an unnecessary recession by holding back on rate cuts. Fed officials, including Chairman Jerome Powell, have argued that the strength of the labor market and the broader economy warrants patience.
