MANHATTAN (CN) — While the employment landscape is still relatively strong, the economy is clearly slowing down, which is both good and bad.
Compared with the 240,000 jobs most analysts had expected, the U.S. economy added just 175,000 jobs last month, according to the April report by the U.S. Bureau of Labor Statistics. The report also noted an unemployment rate of 3.9%, slightly higher than then 3.8% experts had forecast.
The report is a far cry from March’s 303,000 jobs, which was actually revised up by 12,000 jobs. February’s jobs report was changed to reflect 34,000 fewer jobs than originally reported.
The gains were split among several sectors, with construction adding 22,000 jobs, retail netting 56,000 jobs, and just 8,000 jobs added to the public sector. Health care employment continued its momentum, with an increase of 56,000 jobs in April.
Hourly earnings also increased by slightly less than anticipated, gaining 0.2% compared with the 0.3% for which many had hoped. The average work week also ticked down somewhat, according to the bureau.
Lydia Boussour, senior economist at EY-Parthenon, said the report “confirms the broad cooldown in labor market conditions is underway” and noted she expects future employment reports to reflect that trend. “We expect job growth to slow below trend over the course of the year and see the unemployment rate rising to 4.1% by year-end.”
Earlier in the week, job gains reported by payroll company ADP offered a surprise to the upside. ADP reported that 192,000 private sector jobs were added to the U.S. economy in April, better than the 183,000 median forecast and the 184,000 jobs the company said were added in March.
The service industry put up 145,000 of the total jobs, and Southern states also represented two-thirds of the job gains. Larger companies particularly noticed the increase in private sector employment, with establishments employing more than 500 workers adding 98,000 jobs. Companies with fewer than 50 workers gained 38,000 positions.
“Hiring was broad-based in April. Only the information sector — telecommunications, media, and information technology — showed weakness, posting job losses and the smallest pace of pay gains since August 2021,” Nela Richardson, ADP chief economist, said in a statement.
Wage gains ticked down somewhat, with “job stayers” gaining 5% in pay over the last 12 months while “job changers” bettered their pay by 9.3%, a slight decrease from last month.
Other employment data this week bolstered the argument the U.S. economy is on strong footing.
Job openings remained mostly stable, according to the bureau, though the 8.5 million opportunities in March indicates a cooling demand for workers. Job turnover, measured in quits, layoffs and discharges, also fell in April to 5.2 million.
The Bureau of Labor Statistics’ employment cost index also showed pay and inflation remains an issue, with the wages and salaries for private sector employees increasing by 4.3% over the last year. Public sector workers saw their wages increase faster, gaining 5% during that period.
“We expect wage growth and inflation to slow as the year progresses, but the Federal Reserve will need several months of good news on wage growth and inflation before it regains confidence that inflation is back on a sustainable path to 2%,” Nancy Vanden Houten, lead U.S. economist at Oxford Economics, wrote in an investor’s note.
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