The U.S. economy added 253,000 jobs in April, above expectations, while the unemployment rate dipped to 3.4%, according to the U.S. Bureau of Labor Statistics.
Notable job gains occurred in professional and business services, health care, leisure and hospitality, and social assistance.
As of the end of April there were roughly 5.7 million unemployed in the U.S.
The labor force participation rate stood at 62.6%, unchanged compared with March but below the pre-pandemic February 2020 level of 63.3%.
The professional and business services category added about 43,000 jobs in April, followed by 40,000 jobs in health care, 31,000 in leisure and hospitality and 25,000 in social assistance.
Odeta Kushi, deputy chief economist, First American, notes that the construction sector continued to add jobs in April.
“While the housing industry, a very interest-rate sensitive sector, has been negatively impacted by the Federal Reserve’s monetary tightening, the construction labor market has not experienced a sharp decline,” Kushi says. “In the April jobs report, residential building construction employment is up 1.3 percent year over year, while non-residential is up by 3.4 percent. Residential building is up 11 percent compared with pre-pandemic levels, while non-residential building is up approximately 0.5 percent. Both declined modestly on month-over-month basis.”
“Despite the 500-basis point increase in the federal funds rate over the past 14 months, the labor market remains strong,” Kushi says. “Total non-farm payroll employment rose by 253,000 and the unemployment rate slid to 3.4 percent. Important to note February and March jobs numbers were revised down. The trend is still slower hiring, but the slowdown is very gradual.”
“The Fed’s hope is to architect a soft landing, such that tighter monetary policy will reduce job openings without big increases in unemployment,” Kushi says. “If you’re looking for signs of a recession in the labor market data, you won’t find it in this report – a ‘soft landing’ is still on the table.”
“According to the latest JOLTS report, there were 9.6 million job openings in March, a 20 percent decline from the March 2022 peak,” she adds. “However, job openings remained 37 percent higher than in February 2020, and job openings exceeded total hires by 3.4 million, indicating that employers are still struggling to fill vacancies as labor demand outstrips supply.”
“The job market stayed surprisingly strong in April with a gain of more than 250,000 jobs and a drop in the unemployment rate back to 3.4 percent,” says Mike Fratantoni, SVP and chief economist for the Mortgage Bankers Association, in a statement. “Job growth for the prior two months was revised downwards, but on net, the labor market is stronger than expected, including wage growth up 4.4 percent over the past year. This rate of growth is likely faster than would be consistent with the Federal Reserve’s 2 percent inflation target.
“As was the case in recent months, job growth remains concentrated in just a few sectors, particularly health care and hospitality,” Fratantoni adds. “Although we have seen several public layoff announcements, the job growth in these few sectors continues to offset losses in technology and other industries, including the mortgage market.”
“A solid job market will provide support to the housing market. However, the inflationary pressures from this strong wage growth will likely prevent the Federal Reserve from cutting rates any time soon, even if they now are at the peak for this rate cycle.”
Photo: Marten Bjork
