In April, American businesses added 175,000 jobs, as per the Labor Department's report, slightly fewer than in March and below economists' forecasts. The unemployment rate increased to 3.9% from March's 3.8%.
Despite the Federal Reserve's actions to combat inflation by raising borrowing costs, the job market has remained remarkably stable. Businesses have continued to hire at a healthy pace, and the unemployment rate has only seen a modest increase. A recent report also indicated that the slowdown in wage growth has paused.
Economists warn that circumstances could change rapidly, as past spikes in unemployment have often occurred unexpectedly. Demand for workers has already started to decrease, with decreases seen in both job openings and the number of workers voluntarily leaving their jobs.
Federal Reserve Chair Jerome Powell has expressed satisfaction with the job market's performance, noting that inflation could come down to the Fed's target without a significant rise in unemployment. The strong job market has also made it easier for the Fed to focus on managing inflation. The Fed opted to maintain short-term interest rates between 5.25% and 5.5%, the highest in twenty years. Powell mentioned that the recent surge in inflation might delay the Fed's plans to reduce interest rates.
However, Powell also hinted that the Fed was unlikely to raise interest rates further, suggesting readiness to cut rates if necessary, stating that "officials are prepared to respond to unexpected weakening in the labor market."