Manufacturing, restaurants fuel strong US job growth in April
Summary
- Nonfarm payrolls increase 428,000 in April
- Unemployment rate steady at 3.6%; participation rate falls
- Average hourly earnings rise 0.3%
- Average workweek unchanged at 34.6 hours
US job growth increased more than expected in April amid strong hiring in manufacturing as well as the leisure and hospitality industry, underscoring the economy's strong fundamentals despite a drop in output in the first quarter.
Though the Labor Department's closely watched employment report on Friday showed a moderation in wage gains last month, wage pressures are likely to continue to build amid record job openings. About 363,000 people left the labor force in April.
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The economy contracted last quarter under the weight of a record trade deficit. The Federal Reserve is trying to tighten monetary policy to bring down inflation without tipping the economy into recession.
"There's nothing here to interest the Fed one way or the other," said Chris Low, chief economist at FHN Financial in New York.
The survey of establishments showed nonfarm payrolls rose by 428,000 jobs last month. Data for March was revised slightly lower to show 428,000 jobs added instead of 431,000 as previously reported.
Economists polled by Reuters had forecast payrolls would rise by 391,000 jobs. Estimates ranged from a low of 188,000 to a high of 517,000. Employment is now 1.2 million jobs below its pre-pandemic level. It was the 12th straight month of employment gains in excess of 400,000.
The broad increase in hiring last month was led by the leisure and hospitality sector, which added 78,000 jobs. Restaurants and bars contributed 44,000 jobs to those gains.
Manufacturing payrolls rose by 55,000 jobs. Transportation and warehousing employment increased by 52,000 jobs, pushing it 674,000 above its February 2020 level. Employment in the professional and business services also rose and is now 738,000 above its pre-pandemic level.
The Fed on Wednesday raised its policy interest rate by half a percentage point, the biggest hike in 22 years, and said it would begin trimming its bond holdings next month. The US central bank started raising rates in March. Fed Chair Jerome Powell told reporters "the labor market is extremely tight, and inflation is much too high."
US stocks opened lower and the dollar fell against a basket of currencies. US Treasury yields were largely higher.
Details of the household survey from which the unemployment rate is derived were weak. Household employment dropped by 353,000 jobs. The stream of people rejoining the labor force virtually dried up, with 363,000 exiting. A total of 722,000 people entered the labor force in February and March.
As a result, the unemployment rate was unchanged at 3.6%.
The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell to 62.2% from a two-year high of 62.4% in March.
That drop occurred despite reports of retirees returning to the workforce because of the rising cost of living, with annual inflation surging at its quickest pace in more than 40 years.
There were a record 11.5 million job openings on the last day of March, which widened the jobs-workers gap to an all-time high of 3.4% of the labor force from 3.1% in February.
Average hourly earnings increased 0.3% after advancing 0.5% in March. That lowered the year-on-year increase in wages to a still robust 5.5% from 5.6% in March. Compensation for American workers logged its largest increase in more than three decades in the first quarter, helping to keep domestic demand supported.
Though Powell on Wednesday said a 75-basis-point rate hike was not on the table, some economists believe the Fed could raise its benchmark interest rate above its neutral rate, which is estimated to be between 2% and 3%.
