The U.S. labor market cooled in April as both hiring and wage growth slowed more than economists expected in the first month of the second quarter.
In April, the US economy added 175,000 new jobs and the unemployment rate rose to 3.9%, new data from the Bureau of Labor Statistics showed on Friday. Wall Street economists had expected nonfarm payrolls to rise by 240,000 and the unemployment rate to remain at 3.8%, according to Bloomberg data.
Wages also rose less than forecast, with average hourly earnings up 0.2% from last month and 3.9% from last year. Economists had expected a 0.3% monthly advance in April and a 4% increase from last year.
Friday’s report showed a reduction in February’s job growth – a gain of 236,000 non-farm payroll jobs from the previously reported 270,000 – while the March report was initially revised down to 315,000 job gains from 303,000.
Ahead of Friday’s report, economists flagged the revisions as important to watch as they saw average monthly wages revised up by 13,000 jobs last year.
The April jobs report showed that the average workweek length fell to 34.3 from 34.4 last month. The unemployment rate, including the unemployed and those partially attached to the labor force, rose to 7.4%.
By industry, the narrow gains seen in the labor market continued this year, with health and social assistance employment increasing by a combined 87,000, nearly half of the overall growth in non-farm employment.
Retail and transportation and warehousing were the only two industries outside of health and social assistance that saw wage growth north of 20,000 last month.
Earlier this week, data from the BLS suggested wage pressures were building after the Employment Cost Index (ECI) hit its highest level in a year in the first quarter of 2024.
A Wednesday’s press conferenceFederal Reserve Chairman Jerome Powell today downplayed the idea that wage pressures are creating a meaningful inflationary push, noting that “basically all wage measures have slowed significantly” from the peaks reached after the pandemic.
For example, average hourly earnings grew by more than 5% annually in every month between September 2021 and December 2022.
“Like forward-looking indicators JOLTS are out of proportion points to a further slowdown in wage growth,” Oxford Economics’ lead U.S. economist Nancy Vanden Houten wrote in a note ahead of Friday’s jobs report.
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