U.S. employers cut hiring in April but still created 175,000 jobs

WASHINGTON — Employers nationwide cut back on hiring in April but still added 175,000 jobs, a sign that persistently high interest rates could begin to slow the robust U.S. job market.

The government report released Friday showed hiring last month was down sharply from March's dramatic increase of 315,000. And that's well below the gain of 233,000 that economists had predicted for April.

Still, the moderation in the pace of hiring, as well as the slowdown in wage growth last month, will likely be welcomed by the Federal Reserve, which has kept interest rates at a two-decade high to combat a inflation still high. Hourly wages rose less than expected by 0.2% from March and 3.9% from a year earlier, the smallest annual increase since June 2021.

The Fed has delayed any thoughts on cutting interest rates until it is more confident that inflation is gradually slowing toward its 2% target. Rate cuts by the central bank would, over time, reduce the cost of mortgages, auto loans and other consumer and business borrowing.

Stock prices jumped and bond yields fell Friday after the jobs report was released, on hopes that rate cuts may now be more likely in coming months.

A slowdown in payrolls at a decent pace early in the second quarter, coupled with a slowdown in wage gains, will be good news for (Fed) policymakers, said Rubeela Farooqi, chief U.S. economist. United at High Frequency Economics. the view that rate cuts, not hikes, are the Fed's base case this year.

The state of the economy is weighing on voters' minds as the November presidential campaign heats up. Despite the strong job market, Americans generally remain exasperated by high prices, and many blame President Joe Biden.

Even with hiring slowing in April, employment growth over the past month represented a solid increase, although it was the smallest monthly gain since October. As households across the country continue to spend regularly, many employers have had to continue hiring to meet customer demand.

Although the unemployment rate rose from 3.8% to 3.9% in April, this is the 27th consecutive month in which the rate has remained below 4%, tying the longest such streak since the 1960s.

This is certainly a more interesting jobs report than we've seen, said Michael Pugliese, senior economist at Wells Fargo. But it's not like it's disastrous: 175,000 is still a pretty high number, and unemployment below 4% is still pretty healthy. He expects hiring, which averaged 242,000 between February and April, to continue to slow.

Last month's hiring was led by health care companies, which added 56,000 jobs. Warehouse and transportation companies added 22,000 people and retailers added 20,000 people. Government at all levels, which had been hiring aggressively, created just 8,000 jobs in April, the lowest monthly total since December 2022.

Local governments created no jobs last month. Paul Ashworth of Capital Economics noted that state and local government revenues have fallen recently.

Temporary help jobs fell by more than 16,000. These positions are often seen as a potential indicator of where the job market is heading, as companies sometimes test temp jobs before committing to full-time hires. full-time.

The share of the adult population that has a job or is looking for one remained unchanged at 62.7%, well below pre-pandemic levels.

The U.S. labor market has repeatedly proven more robust than almost everyone predicted. When the Fed began aggressively raising rates two years ago to combat a brutal inflationary surge, most economists expected the resulting rise in borrowing costs to cause a recession and push unemployment at painfully high levels.

The Fed raised its benchmark rate 11 times between March 2022 and July 2023, bringing it to its highest level since 2001. Inflation gradually slowed as it was supposed to, from a one-year peak from 9.1% in June 2022 to 3.5%. in March.

Yet the resilient strength of the labor market and the economy as a whole, fueled by stable consumer spending, has kept inflation persistently above the federal government's 2% target.

The job market is showing other signs of slowing. This week, for example, the government announced that job openings had fallen to 8.5 million in March, the lowest figure in more than three years. However, this is a significant number of vacant positions: before 2021, monthly job offers had never exceeded 8 million, a threshold that they have now exceeded every month since March 2021.

Month over month, consumer inflation has not declined since October. The 3.5% year-on-year inflation rate for March was still well above the federal government's 2% target.

Steven Kramer, CEO of WorkJam, an online platform that helps businesses like retailers and hospitality companies manage hourly tasks and training for their workers, said he notices that pressure to raise wages has attenuated. But he sees companies focusing more on flexible working hours for workers who increasingly juggle multiple jobs to pay their bills in the face of persistent inflation. They allow workers to swap jobs or take another job, he said.

Onur Kutlubay, CEO of You Parcel, a Totowa, New Jersey-based company that provides shipping services to small e-commerce businesses, said it's still difficult to find skilled workers like parcel operators. forklifts and supervisors, while unskilled workers are easier to find.

You Parcel employs 43 employees across eight warehouses and storage facilities, most in New Jersey. Kutlubay said he must continue to increase the salaries of his highly skilled employees. In 2020, skilled workers started at $16; now the hourly wage starts at $25. For unskilled workers, the starting wage is now $16; in 2020, that figure was around $11.

He noted that people prefer to work as Uber drivers or work for delivery companies such as DoorDash. These jobs give them the opportunity to get advice from customers, he said. They tend to be more attractive to people. This keeps them away from regular jobs like the ones we have.

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D'Innocenzio reported from New York.

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