WASHINGTON, DC, May 3, 2024 (Bee News Daily) — The United States job growth slowed, and unemployment ticked higher in April, indicating that the labor market weakening.
U.S. employers added a seasonally adjusted 175,00 jobs in April, the Labor Department reported on Friday. That was far less than in March, when gains exceeded 300,000, and also below what economists had expected. The unemployment rate ticked up to 3.9% from March’s 3.8%.
Wages also rose less than anticipated, increasing 3.9% from a year earlier after rising 4.1% in March.
The US unemployment has been below 4% for 27 months. That’s an incredible stretch that hasn’t happened since the late 1960s. Hiring has slowed in past year, but it’s still encouraging: Labor force +1.3 million in the past year as more people look for work. The number of employed is up 529,000 and unemployed up 777,000.
Friday’s report is sure to stir immediate debate among economists and investors about whether the labor market is merely cooling in a welcome fashion or starting to show more serious strains under the pressure of higher interest rates.
Treasury yields, which largely reflect investors’ expectations for short-term rates set by the Federal Reserve, fell after the report. The yield on the benchmark 10-year U.S. Treasury note was 4.471% in recent trading, according to Tradeweb, down from 4.569% Thursday.
Stock futures climbed, suggesting investors were pleased with the data, which could increase optimism about the outlook for inflation.
Before Friday, recent data had shown remarkable stability in the labor market.
Despite the Fed’s efforts to fight inflation by lifting borrowing costs, businesses have continued to hire at a robust clip, the unemployment rate has ticked up only modestly, and a report on Tuesday suggested that a slowdown in wage growth has stalled.
Economists have noted that conditions could shift quickly. Past surges in unemployment have often arrived with little warning. Demand for workers has already cooled, with declines in the number of job openings and in the share of workers voluntarily leaving their jobs.
Fed Chair Jerome Powell has repeatedly said that he is happy that the labor market remains in good shape, and that inflation can come back down to the Fed’s target without a big increase in unemployment.
The strong jobs market has made the Fed’s job easier in some ways, allowing officials to keep their focus on inflation. The Fed on Wednesday kept short-term interest rates between 5.25% and 5.5%, the highest in two decades.
Powell reiterated Wednesday that a recent run of hotter-than-anticipated inflation likely means it will take longer before the Fed starts cutting interest rates.
The Fed’s Chair has also indicated that it is unlikely to raise interest rates any further. He suggested that the central bank was ready to cut rates if necessary, saying that “officials are prepared to respond to unexpected weakening in the labor market.”
Dow futures soar over 500 points after April jobs data comes in significantly below expectations.
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