April jobs report shows hiring and wage growth slowing as unemployment rises unexpectedly

The US labor market slowed significantly last month, as employment and wage growth slowed more than economists expected in April.

The US economy added 175,000 new jobs and the unemployment rate rose to 3.9% last month, new Data from the Bureau of Labor Statistics showed on Friday. Wall Street economists had expected nonfarm payrolls to rise by 240,000 jobs and the unemployment rate to remain at 3.8%, according to Bloomberg data.

Wages also rose less than expected, with average hourly earnings up 0.2% from last month and 3.9% over the past year. Economists had expected to see a 0.3% monthly jump in April and a 4% increase from a year ago.

Friday's report also showed February job growth revised downward — to an increase of 236,000 jobs in nonfarm payrolls from the 270,000 jobs reported previously — while the March report was revised to an increase in jobs of 315,000 jobs from the 303,000 jobs initially reported.

Ahead of Friday's report, economists noted that the revisions are important to watch, as last year saw average monthly payroll gains revised by 13,000 jobs.

The April jobs report also showed that the length of the average work week fell last month to 34.3 from 34.4. The underemployment rate, which includes those who are unemployed and marginally connected to the labor force, rose to 7.4%.

In terms of industry, the small labor market gains seen this year continued, with employment in health care and social assistance increasing by 87,000, accounting for roughly half of the overall growth in nonfarm employment.

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Retail and transportation and warehousing were the only industries outside of health care and social assistance to see payrolls grow north of 20,000 last month.

“We think the near-record warm winter explains some of the strength over the previous four months, and the renewed slowdown in April underscores that a bit — with construction and employment rising by just 8,000 and rates rising,” Paul Ashworth, an economist at Capital Economics, wrote in an email on Friday. Leisure and Hospitality by a measly 5,000.”

Earlier this week, data from the BLS indicated wage pressures were increasing after the Employment Cost Index (ECI) accelerated in the first quarter of 2024 to its highest level in a year.

in Press conference on WednesdayFederal Reserve Chair Jerome Powell played down the idea that today's wage pressures are creating a major inflationary push, noting that “essentially all wage measures have come down” from the peak reached after the pandemic.

For example, average hourly earnings rose more than 5% annually during each month between September 2021 and December 2022.

“Forward-looking indicators such as JOLTS completion rate “Suggests a further slowdown in wage growth,” Nancy Vanden Houten, chief U.S. economist at Oxford Economics, wrote in a note ahead of Friday’s jobs report.

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WASHINGTON, DC - MAY 01: Federal Reserve Chairman Jerome Powell announces that interest rates will remain unchanged during a press conference at the bank's William McChesney Martin Building on May 01, 2024 in Washington, DC.  After the two-day regular meeting of the Federal Open Markets Committee, Powell said that the US economy continues to show momentum and that inflation has remained high in recent months, which informed the Fed's decision to hold the current interest rate at 5.33%.  (Photo by Chip Somodevilla/Getty Images)

Federal Reserve Chairman Jerome Powell announces that interest rates will remain unchanged during a press conference at the bank's William McChesney Martin Building on May 1, 2024, in Washington, D.C. (Chip Somodevilla/Getty Images) (Chip Somodevilla via Getty Images)

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