US job growth slowed more than expected in April and the increase in annual wages fell below 4.0 per cent for the first time in nearly three years, but it is probably too early to expect that the Federal Reserve will start cutting interest rates before September as the labor market remains fairly tight.
The Labor Department’s closely watched employment report on Friday also showed the unemployment rate rising to 3.9pc from 3.8pc in March amid increasing labour supply. Nonetheless, the jobless rate remained below 4pc for the 27th straight month. Data this week showed job openings declining in March.
Signs of labour market cooling raised optimism that the US central bank could after all engineer a “soft-landing” for the economy and doused chatter of stagflation, which had been fanned by news of a sharp moderation in economic growth and a surge in inflation in the first quarter. Financial markets boosted the odds of a September rate cut and saw the Fed reducing borrowing costs twice this year instead of only once before the data.
“A cooler pace of hiring to a more sustainable pace should be interpreted as beneficial with respect to the inflation outlook going forward and remove any lingering concerns of a wage price spiral and put to bed loose and undisciplined talk from the corners of the trading community about stagflation,” said Joe Brusuelas, chief economist at RSM.
Nonfarm payrolls increased by 175,000 jobs last month, the fewest in six months, the Labor Department’s Bureau of Labor Statistics said. Revisions showed 22,000 fewer jobs created in February and March than previously reported. Economists polled by Reuters had forecast payrolls advancing by 243,000. Estimates ranged from 150,000 to 280,000. April’s employment gains were below the 242,000 monthly average for the past year.
Job growth last month was diverse. The healthcare sector added 56,000 positions, spread across ambulatory healthcare services, hospitals, nursing and residential care facilities. It continued to lead employment gains as companies seek to boost staffing levels after losing workers during the pandemic.
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