The US economy added 160,000 jobs in April, fewer than expected, as the unemployment rate held steady at 5%.
Economists had forecast that nonfarm payrolls grew by 200,000 and that the unemployment rate fell to 4.9%.
Construction companies and retailers cut back on hiring as the mining sector continued to bleed jobs.
As the economy approaches full employment — meaning pretty much everyone willing to work and looking for a job has one — the unemployment rate is not expected to plunge that much further from its current level, which is near an eight-year low.
Job gains are also expected to slow down, since the pool of unemployed workers is shrinking.
Prudential Financial’s Quincy Krosby told Business Insider that some employers slowed hiring as they lost confidence in economic growth.
“Overall growth in the economy has been slow to move out of the first-quarter soft patch,” said Krosby, who’s a market strategist for the firm which oversees $1.18 trillion in assets.
A preliminary reading of first-quarter gross domestic product showed that the US economy slowed and grew by 0.5%, the weakest pace in two years.
“Weaker data will raise some serious questions about the resilience of the global economy, if the US as ‘locomotive in chief’ is slowing down,” Alan Ruskin, Deutsche Bank’s global head of G-10 FX strategy, wrote in a note.
Sluggish wage growth has been one of the dark spots of the labour market’s resurgence.
But April brought progress. Average hourly earnings rose 2.5% year-on-year, more than expected.
The wage increase could have been because of a calendar quirk. Deutsche Bank’s Torsten Sløk noted ahead of the report that because April 15 — payday for those on a biweekly schedule — fell early in the survey week for the jobs report, it was likely to cause an upward bias in earnings.
In any case, higher wages would give the Federal Reserve confidence that inflation will move closer to its 2% target. The Fed is trying to decide when to raise rates again after it hiked them for the first time in a decade last December.
The job gains in March were revised down to 208,000 from 215,000.
The labour-force participation rate was expected to hold steady at 63%, but it fell even lower to 62.8%.
It suddenly climbed in the past few months as a near-record number of job openings made employment more attractive for those on the sidelines.
After the release of the jobs report, stock futures fell and bonds rallied. The dollar tumbled towards an 18-month low.
Via Bloomberg, here’s what Wall Street was expecting:
- Nonfarm payrolls:+200,000
- Unemployment rate: 4.9%
- Average hourly earnings month-on-month: +0.3%
- Average hourly earnings year-on-year: +2.4%
- Average weekly hours worked: 34.5