A jobs report released on Friday fell short of expectations, indicating an economic slowdown that could alleviate inflationary pressures and prompt interest rate cuts. However, this trend poses a risk to the nation's robust economic growth.
According to U.S. Bureau of Labor Statistics data, employers added 175,000 workers last month, below economists' forecast of 240,000 jobs. The unemployment rate also rose slightly to 3.9%, remaining near a 50-year low. This hiring slowdown in April represents the lowest monthly figure so far this year.
Economists interviewed by ABC News viewed this data as a mild cooling off, potentially easing concerns of persistent inflation driven by an overly strong economy. They suggested that this slowdown might give the Federal Reserve room to cut interest rates without fear of reigniting rapid price increases.
"This is the jobs report the Fed would have hoped for," said Seema Shah, chief global strategist at Principal Asset Management, in an interview with ABC News.
However, Shah cautioned that a sustained slowdown would be necessary for multiple rate cuts to become a serious consideration, noting that a new concern could emerge: a decelerating economy.
Major stock indexes saw slight gains in early Friday trading.
This moderation in the job market aligns with a similar trend in another key economic indicator: gross domestic product (GDP).
While U.S. output continued to grow at a solid pace, data from the U.S. Commerce Department showed a significant slowdown at the beginning of 2024. This cooldown follows a period of high interest rates; since last July, the Fed Funds rate has remained between 5.25% and 5.5%, matching its highest level in over two decades.
At its recent meeting, the Fed opted to keep its benchmark interest rate unchanged for the sixth consecutive time, citing a lack of recent progress in slowing price increases. While inflation has dropped from a peak of 9.1%, it remains more than a percentage point above the Fed's target rate of 2%, according to Mark Hamrick, senior economic analyst at Bankrate, who spoke with ABC News.
"Feeling concerned that the U.S. economy is overheating?" Hamrick asked. "The April employment report may dampen that notion."
Despite the cooling off, economists are not overly alarmed about the possibility of a weak job market emerging.
"The April jobs report looks really positive," said Mark Zandi, chief economist at Moody's Analytics, in a post on X. "The job market is strong but is slowing down."