The labor market is still defying gravity.
Employers added 253,000 jobs in April, the Labor Department reported Friday, in a reversal of the cooling trend that had marked the first quarter and was expected to continue.
The unemployment rate was 3.4 percent, down from 3.5 percent in March, and matched the level in January, which was the lowest since 1969.
The higher-than-forecast job gain complicates the Federal Reserve’s potential shift toward a pause in interest rate increases. Chair Jerome H. Powell said on Wednesday that the central bank might continue to raise rates if new data showed the economy wasn’t slowing enough to keep prices down.
It’s also an indication that the failure of three banks and the resulting pullback on lending, which is expected to hit smaller businesses particularly hard, hasn’t yet put the brakes on job creation.
“All these things are telling us it’s not a hard stop; it’s creating a headwind, but not a debilitating headwind,” said Carl Riccadonna, chief U.S. economist at BNP Paribas. “A gradual downturn is happening, but it sure is stubborn and persistent in the trend.”
Downward revisions to previous two months altered the spring employment picture meaningfully, subtracting a total of 149,000 jobs. That brings the three-month average to 222,000 jobs, a clear slowdown from the 400,000 added on average in 2022.
Since early 2021, the labor market has been uncommonly tight as employers struggled to reverse a sudden mass layoff and navigate huge shifts in the demand for goods and services. The unemployment rate reached its lowest point since the 1960s. Wages at the low end of the pay scale rose faster than they had in decades.
All of that has benefited groups that have historically been at a disadvantage in the labor market. The unemployment rate for Black Americans reached its lowest point on record in April, at 4.7 percent, and the gap between the unemployment rates of white and Black people was also the smallest ever measured. The share of working-age people participating in the labor market reached 83.3 percent, matching a level not seen since 2008.
In recent months, that exceptional mismatch between the supply and demand for workers has been coming into balance. Job postings, which had reached nearly double the number of available workers, tumbled in the first quarter. And a rebound in immigration eased labor shortages, especially in fields like leisure and hospitality and health care, allowing those to continue to grow quickly.
“I think one of the clearest implications that we’ve seen from the increased flows of work visas is the easing of supply constraints and the uptick in participation,” said Courtney Shupert, an economist at the consulting firm MacroPolicy Perspectives. Jobs filled by immigrants may continue to buoy employment into the summer months, she said, as seasonal workers are hired at parks and resorts.
Source link: https://www.nytimes.com/live/2023/05/05/business/jobs-report-economy-april