Job growth totals 253,000 in April, beating expectations
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The Labor Department reported on Friday that job growth in April exceeded expectations, despite concerns over the decelerating economy and turmoil in the banking industry. Nonfarm payrolls rose by 253,000, surpassing Wall Street estimates of 180,000. The unemployment rate was 3.4%, beating the forecast of 3.6%, and was tied for the lowest level since 1969. Average hourly earnings, a key inflation barometer, also exceeded expectations, rising by 0.5% for the month, the biggest monthly gain in a year. On an annual basis, wages increased 4.4%, higher than the estimated 4.2%. The robust job report could lead to the Federal Reserve raising interest rates again in June, although the markets were only pricing in a small probability following the report.
The Dow Jones Industrial Average opened sharply higher following the jobs news, gaining nearly 400 points, while Treasury yields jumped as well. Despite serious banking industry troubles, jobs in finance increased by 23,000, and government hiring rose by 23,000. However, April’s upside surprise was offset by sharp downward revisions in previous months. March’s count was slashed to 165,000, down 71,000 from the initial estimate, while February fell to 248,000, a reduction of 78,000.
The job gains were led by professional and business services, which increased by 43,000, followed by health care (40,000), leisure and hospitality (31,000), and social assistance (25,000). Although the labor force participation rate was unchanged at 62.6%, the labor force edged lower to 166.7 million. Despite recession concerns, instability in the banking sector, and ongoing layoffs, the strong jobs report was an encouraging sign for the labor market.
Inflation pressures remain a concern, with one measure, the consumer price index, showing inflation running at a 5% annual pace. Rising wages have contributed to this inflation, with Fed Chairman Jerome Powell acknowledging that a 3% annual wage gain is probably consistent with the Fed’s 2% mandate. The Fed is striving to get inflation down to a 2% annual level, although it is currently above that level.