Total nonfarm payroll employment rose by 253,00 in April, according to the latest jobs report from the U.S. Bureau of Labor Statistics. The unemployment rate and the number of unemployed persons changed little in April at 3.4% and 5.7 million, respectively.
“Today’s job report reinforces two things: The labor market is resilient, and job losses are concentrated in select industries (e.g., tech and media). Part of the strength in the job market goes back to what is called ‘labor hoarding,’” says Zonda chief economist Ali Wolf. “While the Fed is trying to slow economic growth, there has been whiplash related to demand.”
Wolf continues, “This has resulted in more conservative hiring and firing practices from companies. Because the path of the economy isn’t clear and the labor market has been tight, some employers are choosing to hold on to their employees in the face of slowing demand longer than they might have in the past.”
Both the labor force participation rate, at 62.6%, and the employment-population ratio, at 60.4%, were unchanged in April and remain below their pre-pandemic February 2020 levels.
Noting that the job market stayed surprisingly strong in April, Mike Fratantoni, Mortgage Bankers Association senior vice president and chief economist, says, “Job growth for the prior two months was revised downward, but, on net, the labor market is stronger than expected, including wage growth up 4.4% over the past year. This rate of growth is likely faster than would be consistent with the Federal Reserve’s 2% inflation target.”
Both Fratantoni and Doug Duncan, chief economist of Fannie Mae, agree that the inflationary pressures from wage growth will likely prevent the Fed from cutting rates any time soon and that the tightening of monetary policy has not significantly slowed the labor market.
“While the Fed has not stated that they are on ‘pause,’ we don’t expect a change in rates until they have more clarity on the regional banking issues through their regulatory lens. Setting that aside, this report does not change our outlook that the Fed will hold rates constant until late in the year,” Duncan adds.
According to the BLS, service-providing sectors led the growth, adding 197,000 jobs. Professional and business services added 43,000 jobs; private education and health services, 77,000 jobs; and leisure and hospitality, 31,000.
Duncan says, “The goods-producing sector saw an increase of 33,000 jobs, with the construction and manufacturing sectors accounting for 26,000 of those jobs. We also note that residential construction (including specialty trade contractors) jumped by 14,200 in April, the largest increase in about a year, a potential boon to home building over the coming months.”
In terms of unemployment, the number of job losers and persons who completed temporary jobs decreased by 307,000 in April to 2.6 million. The number of long-term unemployed—those jobless for 27 weeks or more—changed little at 1.2 million and represented 20.6% of the total unemployed.
In April, the number of people not in the labor force who currently want a job increased by 346,000 over the month to 5.3 million. Of those not in the labor force who wanted a job, the number of persons marginally attached to the labor force increased by 191,000 to 1.5 million in April, while the number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, was little changed over the month at 364,000.
Duncan concludes, “While downward revisions to prior months were large and may suggest future slowing, the overall picture of the labor market remains one of strength.”
