U.S. employment growth likely decelerated in April but sustained a robust pace, alongside consistent wage hikes, alleviating concerns of an economic slowdown post a first-quarter pullback. The upcoming Labor Department report, set for Friday, is anticipated to demonstrate the unemployment rate staying below 4% for a 27th consecutive month. This prolonged labor market strength indicates that the Federal Reserve is unlikely to rush into lowering interest rates, which have remained unchanged since July.
Sung Won Sohn, a professor of finance and economics at Loyola Marymount University, characterized the employment market as no longer being "the rose of a strong employment market" but still "pretty," projecting a slow yet healthy job market trajectory into 2025 unless the Fed maintains high rates for an extended period.
It is anticipated that nonfarm payrolls expanded by 243,000 jobs in April, slightly under the first quarter's monthly average of 276,000. Economists have cautioned against giving too much weight to surveys predicting a sharp slowdown, pointing out the labor market's resilience. They have also played down the drop in temporary help staffing, highlighting companies' ongoing employment of workers.
The growth in employment in sectors such as healthcare, state and local governments, construction, and leisure and hospitality is expected to continue in April. Average hourly earnings are forecasted to rise by 0.3%, with an upside potential due to a higher minimum wage in California. Wages are expected to increase by 4.0% in the 12 months through April.
The unemployment rate is predicted to remain unchanged at 3.8% in April, supported by a surge in immigration over the past year. Financial markets anticipate the Fed to commence easing in September, but some economists believe this window is closing. Since March 2022, the Fed has raised its policy rate by 525 basis points.