WASHINGTON (Reuters) – U.S. job growth slowed more than expected in April and the increase in annual wages fell below 4.0% for the first time in nearly three years, but it is probably too early to expect that the Federal Reserve will start cutting interest rates before September as the labor market remains fairly tight.
The Labor Department’s closely watched employment report on Friday also showed the unemployment rate rising to 3.9% from 3.8% in March amid rising labor supply. Nonetheless, the jobless rate remained below 4% for the 27th straight month.
Financial markets boosted the odds of a September rate cut and saw the U.S. central bank reducing borrowing costs twice this year instead of only once before the data.
“Today’s report was a far cry from the kind of labor market weakness that would prompt a Fed rate cut,” said Chris Low, chief economist at FNH Financial. “Nevertheless, more abundant labor and slower job and wage growth should help contain inflation, and that is the key to rate cuts.”
Nonfarm payrolls increased by 175,000 jobs last month, the fewest in six months, the Labor Department’s Bureau of Statistics said. Revisions showed 22,000 fewer jobs created in February and March than previously reported.
Economists polled by Reuters had forecast payrolls advancing by 243,000. Estimates ranged from 150,000 to 280,000.
April’s employment gains were below the 242,000 monthly average for the past year.
The healthcare sector continued to lead job growth, adding 56,000 positions, spread across ambulatory healthcare services, hospitals, nursing and residential care facilities.
Firstly, the slowdown in US job gains reflects various factors impacting the labor market. One such factor is the ongoing supply chain disruptions affecting industries nationwide. Additionally, uncertainties surrounding the global economic recovery have contributed to cautious hiring practices among businesses.
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