In April, the growth of jobs in the US slowed notably, with only 175,000 positions added, according to data from the Bureau of Labor Statistics released on Friday. This slowdown, the most sluggish since October of the previous year, corresponds with efforts by the Federal Reserve to dampen demand and rein in high inflation. Economists had predicted this deceleration due to the impact of high interest rates on the labor market.
Despite falling short of the upwardly revised 315,000 gains in March, the April figures are in line with the pace seen before the pandemic and the neutral rate of job growth needed to keep up with population growth. The markets responded positively to the news, with Dow futures rising by 505 points or 1.3%, S&P 500 futures up by 1.1%, and Nasdaq futures gaining 1.5%.
The unemployment rate rose to 3.9%, marking the 27th consecutive month that the rate has remained below 4%, matching a streak last observed in the late 1960s. Economists had expected an addition of 235,000 jobs and a stable unemployment rate of 3.8%.
Most of April's job gains were in the healthcare and social assistance sector, with additional growth recorded in transportation, warehousing, and retail trade. Despite the slowdown, economists view the current labor market as strong and tight compared to previous years.
The report also indicated a slowdown in wage growth, with average hourly earnings increasing by 0.2% from March and 3.9% over the past year, the lowest level since May 2021. Fed officials are closely monitoring wage gains, as accelerated compensation growth could lead to inflationary pressures.
While the job numbers for April were lower, economists do not see them as indicating a significant weakening in the labor market. The Fed is expected to maintain its current monetary policy until there is a clear slowdown in inflation or an unexpected weakening in the labor market.