Non-farm employment rose by 175k in April, below the consensus forecast of 240k. Job gains in the two prior months were also revised lower by a combined 22k.
Private payrolls rose 167k, with most of the gains concentrated in health care & social assistance (87k), transportation & warehousing (21.8k) and retail trade (20.1k). Meanwhile, information (-8k), professional & business services (-4k) and mining & logging (-3k) all shed jobs last month. Government hiring slowed considerably, adding just 8k jobs last month – well below the 62k averaged over the prior three months.
In the household survey, both civilian employment (+25k) and the labor force (+87k) saw very modest gains. With the latter outstripping the former, the unemployment rate ticked up 0.1 percentage points to 3.9%. Meanwhile, the labor force participation rate held steady at 62.7%.
Average hourly earnings (AHE) were up 0.2% month-on-month (m/m) – a deceleration from March’s 0.3% m/m gain. On a twelve-month basis, AHE slipped to 3.9 % – the slowest pace of growth in nearly three years – while the three-month annualized rate of change dipped to an even softer 2.8% (from 4.0% in March).
Key Implications
The U.S. job engine lost a bit of momentum in April, with payrolls printing below the 200k mark for the first time in five months. However, smoothing through the monthly volatility shows job gains have averaged a still healthy 242k over the past three-months, which is only a modest step down from Q1’s 269K, and still above Q4’2023’s average of 212k. Importantly, wage growth decelerated a bit more than expected last month. This will be welcome news for Fed officials – particularly after other data points out this week including the Employment Cost Index showed an uptick in wage pressures more recently.
By most metrics, the labor market remains both healthy and tight. Employment gains remain robust, the unemployment rate is low, and job openings – while falling – are still elevated relative to pre-pandemic levels. With the unemployment rate expected to hold steady through Q2, inflation is unlikely to ease in a way that would give policymakers enough confidence that it’s on sustainable path back to 2% until sometime in the second half of the year. As a result, we have pushed out the timing of the first Fed rate cut until December.
