The U.S. job market rebounded strongly last month and the unemployment rate fell to the lowest level seen in a decade, government data released Friday morning showed, calming fears that had bubbled up in the past month about the state of the economy.
Employers added 211,000 jobs in April as the unemployment rate ticked down to 4.4 percent, the lowest level since May 2007. Average hourly earnings rose by 2.5 percent from the previous year to $26.19, slightly slower growth than was seen in previous months.
The report offered a snapshot of an increasingly solid economy. The U.S. labor market is still expanding at a steady clip even after 79 straight months of job gains, helping to heal much of the damage still lingering from the recession.
“The American job machine returned to form in April,” James Marple, senior economist at TD Economics, wrote in an email to clients. “The re-acceleration in jobs should assuage fears that economic growth is slowing in any meaningful way.”
Job gains were seen in mining and manufacturing, sectors that are relatively small but have been closely watched due to the Trump administration’s vows to boost employment in the industries. But the bulk of the job growth in April came from the much larger sectors of leisure and hospitality, education and health, and business services.
At 4.4 percent, the headline unemployment rate — which measures people who are actively looking for work but unable to find it — is now below the longer-term level targeted by the Federal Reserve. Broader measures of unemployment and underemployment also continue to improve. The U-6 rate, a measure that includes people who have given up looking for work, as well as those who are employed part time but would like to be full time, fell to 8.6 percent in the month, the lowest level seen since 2007.
“This steady and sustained increase in job creation equals new paychecks for American workers and income for American families,” Secretary of Labor Alexander Acosta said in a statement Friday. “Nonetheless, we have challenges ahead as we continue to focus on job growth, on bridging the skills gap and on expanding opportunity for all Americans.”
The blue-chip Dow Jones industrial average and the broader Standard & Poor’s 500 index both inched up in afternoon trading.
The job market was widely expected to rebound in April following a disappointing figure in March and a surprisingly high reading in February. Employers added only 79,000 jobs in March, due partly to a snowstorm that weighed on economic activity, revised figures released by the government on Friday showed. But the month before, the second warmest February on record, the economy added a total of 232,000 jobs as warmer weather helped to buoy activity in the construction industry.
Following lower job growth in March, federal economists also reported that the U.S. economy expanded at its slowest pace in three years in the first quarter, a figure attributed to persistent measurement issues. The Federal Reserve cited the slowdown in its decision Wednesday to leave its influential interest rate unchanged, though it said that slower first-quarter growth was likely to be “transitory.”
The stronger reading for the jobs market and the larger-than-expected drop in the unemployment rate in April could help reassure the Fed to continue with its plan of raising interest rates twice more this year. On Friday after the jobs report was released, futures markets pointed to a 78.5 percent chance that central bank officials would lift interest rates when they next meet in June.
“A rate hike in June is more likely than not,” Curt Long, chief economist at the National Association of Federally-Insured Credit Unions, wrote Friday.
Yet some economists noted that the gains made by the broader economy still do not appear to be translating into big wage increases for workers — something that many had expected by now. As the economy expands and more people who want jobs are able to find them, employers should have to compete more to find talented people — which should force them to offer higher wages.
But average hourly earnings rose just 2.5 percent on an annualized basis, down from the higher gains seen in February and March.
“Two hundred thousand for jobs growth is just such a huge number, you’d think we’d get to a point where employers have to raise wages, and we’re still not seeing it,” said Tara Sinclair, an economist at George Washington University and a senior fellow at jobs site Indeed.
That may point to lingering issues with the economy. Some economists argue that wages remain so low because gains in productivity — an all-important measure of how much a given worker or machine can produce — have been sluggish in recent years.
“It weighs on potential growth. It weighs on growth in living standards,” said Jeremy Lawson, an economist at Standard Life Investment. “It sends a signal to Congress and to the Trump administration that the real problem that needs to be solved is America’s productivity. You need a set of policies that can lift potential growth. And that’s not really in the offing at the moment.”
Elise Gould, an economist at the Economic Policy Institute, also cautioned policymakers to remember groups that have been left behind.
In April, the unemployment rate sat at 3.8 percent among whites and 3.2 percent among Asians, but 7.9 percent among African Americans and 5.2 percent among Hispanics. None of those rates changed from the month before. Younger people also continue to graduate into a weaker economy than generations before them, Gould said.
“Yes, it’s a rosier picture for today’s graduates, but we know that when people graduate into a weaker economy, that can have effects many years down the road,” she said. “It’s still not like the economy we saw in 2000.”
Unemployment rate drops to lowest level in a decade in April as economy adds 211000 jobs – Washington Post