Job growth accelerated by 428k in April, more-than-expected as the employment picture remains strong

The US economy added slightly more jobs than expected in April amid an increasingly tight job market and despite rising inflation and fears of slowing growth, the Bureau of Labor Statistics reported on Friday.

Nonfarm payrolls rose 428k this month, slightly more than the Dow Jones estimate of 400k. The unemployment rate was 3.6%, slightly above the 3.5% estimate. The April total was identical to the March count, which was revised downwards.

There was better news on the inflation front as well, with average hourly wages continuing to rise, but at 0.3% for the month, slightly below the 0.4% estimate. On a yearly basis, earnings rose 5.5%, about the same as in March but still below the pace of inflation.

An alternative measure of unemployment, which includes discouraged workers and those who have part-time jobs for economic reasons, sometimes referred to as the “true” unemployment rate, edged up to 7%.

Black unemployment has been steadily declining, falling again to 5.9%, while Hispanic unemployment rose to 4.1% and Asian unemployment to 3.1%. The unemployment rate for people with disabilities fell 0.5 percentage points from March to 8.3%.

“The job market continues to advance, driven by strong demand from employers. After a little over two years of the pandemic, the job market remains resilient and on track to return to pre-pandemic levels this summer,” said Daniel Zhao, senior economist at job listing site Glassdoor. “However, the labor market is showing some signs of cooling as it turns the corner and the recovery enters a new phase.”

The labor force participation rate, a key metric of worker engagement, fell 0.2 percentage points to 62.2% for the month, the first monthly decline since March 2021, when the labor force shrank by 363,000. Level is of particular concern with a gap of around 5.6 million between job postings and available labour.

“The demand for labor remains very strong; the problem is a shortage of available labor and April’s decline in the labor force participation rate could add to wage pressures,” wrote PNC chief economist Gus Faucher.

Leisure and hospitality led again to 78k job growth. The unemployment rate in the sector hardest hit by the Covid pandemic plummeted to 4.8%, its lowest since September 2019, after peaking at 39.3% in April 2020. The sector’s average hourly wages rose 0.6% for the month and are up 11% from a year ago.

Other big gainers were manufacturing (55,000), transportation and warehousing (52,000), professional and business services (41,000), financial activities (35,000) and healthcare (34,000). Retail also showed solid growth, adding 29,000 mainly due to gains in food and beverage stores.

However, some of the details in the report were not that strong.

The survey of households actually showed a drop of 353,000, leaving the level of 761,000 below where it was in February 2020, just before the pandemic started. April marked the first monthly decline in the household survey since April 2020.

Stock futures fell as Wall Street processed the data and Treasury yields were mostly higher.

The report is unlikely to do much to sway the Federal Reserve from its current trajectory of raising interest rates. The central bank announced on Wednesday that it would raise its benchmark interest rate by half a percentage point in a bid to stamp out price hikes at the fastest pace in more than 40 years.

“Overall, given still-strong labor market conditions — including very rapid wage growth — we doubt the Fed will abandon its hawkish plans given the current weakness in equities,” said Paul Ashworth, chief US economist at Capital Economics.

The job growth comes as the US economy experiences its worst quarter of growth since the pandemic began and job output fell 7.5% in the first three months, the biggest slowdown since 1947 and the second-worst quarter on record. GDP fell by 1.4% from January to March.

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Correction: March non-farm payrolls revised downwards. A previous version misread the direction. Job growth accelerated by 428k in April, more-than-expected as the employment picture remains strong

Jane Marczewski

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