US Economy Adds 253,000 New Jobs in April, Unemployment Rate Ticks Lower

Andrew Moran
By Andrew Moran
May 5, 2023Businessshare
US Economy Adds 253,000 New Jobs in April, Unemployment Rate Ticks Lower
A job seeker meets with a recruiter during the Healthcare Academy career and training fair outside of the Chase Center in San Francisco on June 3, 2022. (Justin Sullivan/Getty Images)

The U.S. economy added 253,000 new jobs in April, up from a downwardly revised 165,000 in March, according to the Bureau of Labor Statistics (BLS). This was higher than the market estimate of 180,000.

Employment gains were revised down for February by 78,000 to 248,000 and changed downward for March by 71,000 to 165,000.

The unemployment rate edged lower to 3.4 percent, down from 3.5 percent and below economists’ expectations of 3.6 percent.

Average hourly earnings rose to 4.4 percent year-over-year, slightly higher than 4.3 percent in March. On a monthly basis, average hourly earnings climbed 0.5 percent, up from 0.3 percent.

Average weekly hours were unchanged at 34.4. The labor force participation rate was also flat at 62.6 percent.

Employment gains were broad-based, led by professional and business services (43,000), health care (40,000), leisure and hospitality (31,000), financial activities (23,000), and government (23,000).

“Employment was little changed over the month in other major industries, including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, and other services,” the BLS reported.

Eric Winograd, the chief economist and strategist at AllianceBernstein, told Morningstar that employment growth below 100,000 would be considered “weakening.” He does not see job losses until the second half of 2023.

“Though jobs growth has already started to slow, we haven’t seen job losses yet,” Winograd says. “As we move into the second half of the year, we will see some negative months, but the data suggests we’re still a long way from that.

Marriott human resources recruiter Mariela Cuevas (L) talks to Lisbet Oliveros, during a job fair at Hard Rock Stadium, in Miami Gardens, Fla., on Sept. 3, 2021. (Marta Lavandier/AP Photo)

The number of people working two or more jobs remained elevated at 7.707 million. The number of individuals employed part-time for economic reasons was little changed at 3.9 million. The number of people not in the labor force but who want a job surged by 346,000 to 5.3 million.

After the jobs data, financial markets were hovering in positive territory in pre-market trading, with the leading benchmark indexes up about 0.4 percent.

The U.S. Treasury market was mostly positive across the board, with the benchmark 10-year yield adding nearly 10 basis points to around 3.45 percent.

The U.S. Dollar Index (DXY), a measurement of the greenback against a basket of currencies, popped 0.3 percent to above 101.70.

“April delivered another month of jobs results that beat economists’ expectations as the labor market remains resilient,” said Cody Harker, the Head of Data and Insights at recruitment marketing firm Bayard Advertising. “Despite a general cooling trend, the market pushes forward once again, driven by solid momentum in COVID-sensitive verticals and continued consumer spending on services.”

So, what does this mean for the Federal Reserve?

Strong wage growth and lower joblessness offer the central bank more flexibility in its tightening cycle, market experts say.

“It has been the one major sticking point in the Fed’s inflationary battle as unemployment remains at historical lows. While it tends to be a lagging inflationary signal, it is important for the Fed to see the labor market cool – now more than ever,” said Jay Woods, the chief global strategist at Freedom Capital Markets.

The U.S. labor market has sent mixed signals since the beginning of the year.

Mixed Data

After two strong job reports in January and February, conditions had ostensibly cooled. There have been more layoffs, a decline in job openings and quits, slowing wage growth, and tighter credit conditions forcing employers to prioritize.

This past week, the employment data offered different indicators.

Employment levels in the manufacturing sector, for example, might have rebounded in April, according to the Institute for Supply Management’s (ISM) Purchasing Managers’ Index (PMI). The sub-index touched expansion territory for the first time since January, rising from 46.9 to 50.2.

Tech layoffs might have also eased in April. The monthly Challenger job cuts data showed that retail led all industries with nearly 15,000 layoffs, topping the technology sector (11,553).

Moreover, labor costs unexpectedly surged in the first quarter, BLS data showed on May 4. Unit labor costs advanced to 6.3 percent in the January-to-March period, up from 3.3 percent in the fourth quarter and higher than the market estimate of 5.5 percent. Plus, non-farm productivity tanked 2.7 percent, down from 1.6 percent in the previous three months.

As credit conditions continue to tighten in the fallout of the Silicon Valley Bank, Signature Bank, and First Republic failures, the U.S. labor market might still be absorbing economic conditions.

From The Epoch Times

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