U.S. Employers Added 175,000 Jobs in April

The U.S. labor market may shift to a slower pace this spring, a shift that economists have been anticipating for months after a strong rebound from the pandemic shock.

Employers added 175,000 jobs in April, falling short of expectations, the Labor Department reported Friday. The unemployment rate rose to 3.9 percent.

A less sharp expansion after averaging 242,000 jobs over the previous 12 months is not necessarily bad news, since layoffs have remained low and most sectors appear to be stable.

“It’s not a bad economy; “It’s still a healthy economy,” said Burke Pineda, chief economist at the Plastics Industry Association. “I think it’s part of the cycle. We can’t continue strong growth indefinitely given the limits of our economy.

The labor market has defied expectations of a major slowdown for more than a year in the face of rapidly rising borrowing costs, a minor banking crisis, and two major wars. But economic growth fell significantly in the first quarter, suggesting that the exuberance that has characterized the past two years may be settling into a more sustainable rhythm.

Wage growth fell sharply in April, falling to 3.9% from a year earlier. Rapid growth in wages in the first quarter, reflected in higher-than-expected prices Labor cost index The reading may partly reflect increases and minimum wages that will take effect in January as well as new union contracts.

The average number of hours worked per week decreased, another sign of decreased demand for labor.

These numbers may be good news for the Federal Reserve, which has kept interest rates steady as inflation remains stubborn. Although Federal Reserve Chairman Jerome Powell said this week that he was not targeting lower wage growth, he added that continued hot wage gains could prevent inflation from being tamed.

Bond yields fell on the new data, signaling belief that the Federal Reserve may cut interest rates this year after some doubted it would do so, and the S&P 500 index rose sharply in morning trading.

The payroll number is in line with other indicators of the slowdown conditions that have mounted in recent months: Job openings have opened up decreased significantly From their peak two years ago, workers are leaving their jobs at lower rates than before the pandemic.

“We have seen a significant decline in labor demand, and it is not surprising that hiring will also slow in this economic environment where interest rates remain high,” said Lydia Boussour, chief economist at consulting firm EY-Parthenon. “We are also seeing cost fatigue from consumers and businesses, putting downward pressure on private sector activity.”

Employment growth narrowed to a few industries, and this trend continued in April, with health care accounting for a third of growth.

Leisure and hospitality employment has been essentially flat, stalling somewhat rapid growth as the industry approaches pre-pandemic employment levels.

Quiets in interest-rate-sensitive sectors like technology and manufacturing have been offset by continued growth in industries like health care, supported by aging demographics, and state and local governments, which have been catching up after losing workers to better offers during the recession. pandemic.

Federal funding has supported construction on large infrastructure projects and private investment in clean energy development, as well as subsidies for industries like child care that continue to trickle into the economy.

“Depending on where we end up, the question is how many of us could end up working for the government in one way or another,” said Belinda Roman, associate professor of economics at Saint Mary’s University in San Antonio.

As wages rose — outpacing inflation on average by about a year — more people began looking for jobs, allowing employers to fill positions more quickly. The growing influx of legal and undocumented immigrants added about 80,000 workers to the labor supply each month last year, according to Goldman Sachs calculations, and will add another 50,000 workers a month this year.

Beyond public spending, much of the lasting strength comes from household purchases, which have depleted bank balances built up during the pandemic. As savings rates fall and consumer loan delinquencies rise, the rocket fuel will likely run out, leaving an economy that remains fundamentally intact.

“We still expect what we call a modest slowdown, but the picture is improving again,” said Stephen Brown, deputy chief economist for North America at Capital Economics. “For the average worker, it won’t feel like a slowdown.”

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