Job creation was better than expected in April, as the US labor market continued to defy expectations for a stronger contraction this year, the Bureau of Labor Statistics reported on Friday.
Nonfarm payrolls rose by a seasonally adjusted 115,000 in the month, down from 185,000 created in an unusually strong March, but better than the forecast of 55,000 in the Dow Jones consensus estimate.
The unemployment rate held at 4.3%, further evidence that the labor market has reached a point where less job creation is needed to keep the unemployment rate stable, given the low growth in the labor force.
Average hourly earnings, another closely watched metric of the labor market’s health, came in lower than expected, rising 0.2% for the month and 3.6% for the year, compared with sequential estimates of 0.3% and 3.8%.
Stock market futures held on to gains following the issuance while Treasury yields were lower.
The report is “a testament to the fundamental strength of this economy and this labor market, despite all the concerns and arrows of strange concern about the Middle East and unemployment and inflation and the Fed,” said Scott Clemons, chief investment strategist at Brown Brothers Harriman.
“One month doesn’t start a new trend,” he added. “There’s been a lot of month-to-month volatility in the labor market over the past year. I’m not sure that’s gone completely. We get two or three more months of strong job gains, and then I feel a little bit more comfortable.”
Following recent trends, health care led the way with 37,000 new positions, although many other sectors also saw gains.
Transportation and storage added 30,000, retailers grew 22,000, and social assistance gained 17,000.
On the other hand, information services lost 13,000, which is part of a continuing trend that has caused the sector to lose 342,000 jobs from November 2022, accompanied by the rise of artificial intelligence. That equates to an 11% job loss over that period.
A broader measure that includes discouraged workers and those taking part-time jobs for economic reasons rose to 8.2%, up 0.2 percentage points. The household survey, used by the bureau to calculate the unemployment rate, showed a drop of 226,000 workers as the participation rate fell to 61.8%, the lowest since October 2021.
The so-called real unemployment rate has increased to the point where there has been an increase in those who are temporarily employed for economic reasons, often referred to as the unemployed. The rate increased by 445,000 to 4.9 million.
Updates from earlier reports were mixed: March’s number rose by 7,000 while February’s number fell sharply, falling by 23,000 to a loss of 156,000. The initial report put job losses in February at 92,000.
“I look at the report trying to find problems, and there are no bullets this month,” said Dan North, chief economist for North America at Allianz. “You have to say that the overall numbers are not very encouraging. I think they still point to a soft job market, but it’s certainly not a collapse.”
The report comes at a critical time for the Federal Reserve, which has seen an unusual level of disagreement among officials over monetary policy.
While layoffs are at their lowest levels in decades, economists are increasingly pointing to slow hiring as the main source of labor market cooling. Although hard data was strong, sentiment indicators show hot hiring plans in both the manufacturing and services sectors.
Last week, the central bank voted 8-4 in favor of keeping the rate stable, the highest level of “no” votes since 1992. Officials largely agreed on the decision to hold but disagreed on communications about where policy would go from here. Opponents have widely expressed the view that the next move could be higher or lower, depending on how conditions unfold.
Policy has also been complicated by the Iran war and tariffs. The Fed is expected to have a new chairman soon as former Governor Kevin Warsh awaits Senate confirmation.
Markets expect prices to remain flat throughout the year as the economy struggles with inflationary pressures and a labor market that, despite the rapid hiring pace of previous years, has been able to recover.
