Employers sped up hiring in April, adding a healthy 253,000 jobs in sign the tight labor market continues to propel the U.S. economy despite stubbornly high inflation and banking industry turmoil.
Economists had expected payroll gains of 180,000. The nation’s unemployment rate fell to 3.4% from 3.5% in the prior month, the Labor Department said on Friday. That matched the lowest jobless rate since 1969.
The continued strength in the job market is defying economists’ predictions that the Federal Reserve’s year-long series of interest rate hikes would dampen hiring. On Wednesday, the Fed raised its benchmark interest rate another quarter of a percentage point, while signaling that it could pause the increases to assess the impact of monetary tightening on the economy.
Payroll growth had been slowing, falling from 427,000 in January to 165,000 in March, but unexpectedly reversed in April, according to the early estimate.
“It’s a ‘jack-in-the-box’ labor market: It keeps cranking until eventually a surprise pops up,” noted Dave Gilbertson, vice president at UKG, a payroll and shift management software company, in an email.
He added, “New job creation swelled in April, defying consensus expectations for a cooling job market. With 1.65 new jobs for every worker looking for a job in March and a robust number of new jobs added in April, we’re still in a tight labor market.”
Average hourly earnings for non-managers continued to cool last month, but overall workers’ pay ticked up, growing at a 4.4% rate.
“The labor market surprisingly remains hot and tight as indicated by a trifecta of strength reported in the three key categories in April — employment, the unemployment rate and average hourly earnings,” Nationwide Chief Economist Kathy Bostjancic said in an email.
The Fed’s moves to slow the economy have had an effect, notably in the housing market, where steadily rising borrowing costs have brought sales of existing homes sharply lower in March from a year earlier. Investment in housing has cratered over the past year. America’s factories are slumping, too. An index produced by the Institute for Supply Management, an organization of purchasing managers, has signaled a contraction in manufacturing for six straight months.
But even as some areas of the economy show signs of cooling, employers continue to grapple with a tight labor market, leading many businesses to retain their existing workers. Some industries, notably professional and business services, health care and leisure and hospitality showed strong job growth last month, the Labor Department said.
Some economists expect employers to apply the brakes later in the year as the impact of the economic slowdown spreads to more businesses. For now, the Fed’s interest rate hikes have yet to throw the job market into reverse, noted Steve Rick, chief economist at CUNA Mutual Group, in an email.
“We’re anticipating a mild downturn in the second half of 2023 as consumers’ spending slows,” Rick said. “Last week’s first quarter GDP rate announcement was cooler than expected and evidence the economy is beginning to slow down.”
With reporting by the Associated Press.