Washington, D.C. – The labor market in the United States experienced a noticeable cooling effect last month, with both hiring and wage growth slowing down more than anticipated in April. Data released by the Bureau of Labor Statistics on Friday revealed that the US economy added 175,000 new jobs, causing the unemployment rate to rise to 3.9%. This figure came in below the expectations of Wall Street economists, who had forecasted an increase of 240,000 nonfarm payrolls and expected the unemployment rate to remain at 3.8%.
Moreover, wage growth also fell short of projections, with average hourly earnings only rising by 0.2% from the previous month and 3.9% from the previous year. Economists had predicted a monthly increase of 0.3% for April and a year-over-year rise of 4%. Additionally, revisions to the February job growth numbers were downwardly adjusted to 236,000 nonfarm payroll jobs, while March saw an upward revision to 315,000 jobs gained.
Notably, the length of the average workweek decreased slightly to 34.3 hours from 34.4 hours, and the underemployment rate, which includes the unemployed and marginally attached workers, rose to 7.4%. Industry-wise, healthcare and social assistance saw significant employment growth, adding a combined 87,000 jobs in April, accounting for approximately half of the overall increase in nonfarm employment.
Economists had been closely monitoring revisions in job gains, given that previous years have seen an average revision downwards of 13,000 jobs per month. The recent slowdown in wage growth further supports the possibility of the Federal Reserve lowering interest rates at some point this year. Despite inflation data exceeding the central bank’s 2% target, recent months have shown inconsistent progress towards that mark.
In a press conference earlier in the week, Federal Reserve Chair Jerome Powell addressed concerns about wage pressures potentially leading to inflation, stating that most wage measures have decreased substantially since the peak levels seen post-pandemic. This sentiment was echoed by leading US economist Nancy Vanden Houten from Oxford Economics, who pointed to forward-looking indicators suggesting a continued slowdown in wage growth.
Given the ongoing economic developments, it remains crucial for investors to stay informed with the latest economic news and indicators. This breaking news story will continue to evolve as more information becomes available.