Minneapolis (CNN) High prices, rising interest rates and bank uncertainty, damn it: the US job market keeps chugging on.
Employers added 253,000 jobs in April, the Bureau of Labor Statistics reported Friday.
That’s a fair bit more than economists were expecting, and makes this job report the 12th of the last 13 to come in “hot.”
Here are some takeaways from the report and what it could mean for workers, job seekers, employers, the Federal Reserve and everyone in between:
The job market is “unstoppable”
When the Federal Reserve launched its anti-inflation campaign in March 2022, concerns grew about possible collateral damage: How many Americans could lose their jobs as a result?
The blunt effect of rate hikes – which make money more expensive to borrow and in turn lower demand and prices – was expected to cool the country’s red-hot job market, which at the time had a historically low unemployment rate of 3.6% would .
Fourteen months and 5 percentage points later, the economy has added more than a quarter million jobs and the unemployment rate has fallen back to a decade low of 3.4%.
“The American job market is simply unstoppable right now,” RSM economist Joseph Brusuelas wrote in a statement on Friday. “It’s a bit like how sports commentators used to describe defending basketball great Michael Jordan: you can’t stop him, you can only hope to contain him.”
And for job seekers and employees, this is a great thing:
“You want a job, you can ask him,” Chris Rupkey, chief economist at FwdBonds, wrote in a note.
Fueling those hopes of a “soft landing.”
Job growth last month may have been stronger than economists expected, but the latest BLS report also noted that previously reported estimates for February and March have been revised down by a total of 149,000 jobs.
These revisions bring average job growth back to 222k over the past three months. While that’s above the average monthly gain of 183,000 in the decade before the pandemic, it is well below what was seen during the economic recovery of the last two years (when monthly job gains averaged 399,000 in 2022 and 606,000 in 2021) .
“We’re seeing a slowdown in the jobs market, and that’s good news from an inflation perspective,” Gus Faucher, chief economist at PNC Financial Services Group, told CNN. “Companies are still trying to hire workers, labor demand is still strong, but it’s not quite as strong as it was at the end of 2022. It looks like companies are realizing it might be a bit easier now to hire workers to find .”
The continued resilience of the job market is also helping to boost hopes that the Fed may still be able to lower inflation without throwing millions of people onto the jobless list and triggering a recession.
“This is what a soft landing would look like, with job growth gradually slowing to a more sustainable pace,” Faucher added. “But whether we’ve managed a soft landing, we probably won’t know until the end of this year.”
A milestone for black unemployment
The black unemployment rate fell to a record low for the second straight month in April, providing new evidence of America’s historic job boom.
The black unemployment rate fell to 4.7% last month from 5% the previous month. That’s the lowest level since records began in 1972, and a sharp 5.7% decline in February.
The milestone comes just three years after the Covid-19 pandemic caused mass layoffs that pushed black unemployment rates up to 16.8%.
While this is promising news at first glance, the fall in interest rates has been accompanied by falls in black labor force participation and employment, said Heidi Shierholz, a former chief economist at the Labor Department who now serves as president of the Economic Policy Institute.
“Make no mistake, black man [unemployment] is still too high,” said Shierholz tweeted. “Due to the impact of structural racism on the labor market [Black & Hispanic workers] have much higher [unemployment] prices than white [workers]. But the strong job recovery has done the trick [Black and Hispanic unemployment] much faster than in the past.”
Wage growth picks up again: Good for the consumer and the economy, but not for the Fed
Friday’s jobs report showed that average hourly wages rose 16 cents, or 0.5%, to $33.36 in April, the biggest monthly gain since March 2022, though wage growth has slowed since then.
Year-on-year, wages rose 4.4%, slightly higher than the previous month but lower than the 5.9% increase in March last year.
Strong wage growth complicates the Fed’s task of dampening inflation, as higher labor costs could put upward pressure on inflation.
When wages rise, that’s good news for consumer spending and the economy. But it’s a roadblock for the Fed, noted Scott Anderson, chief economist at Bank of the West.
“The more stubborn the job and wage gains, the longer the Fed will have to remain on a tight monetary stance, and the greater the likelihood of an economic slowdown sometime this year,” he wrote.
“Cracks Appear”
For the first four months of the year, job growth has averaged 285,000 a month, more people are participating in the labor market, and even some of the most challenged sectors like manufacturing and construction are seeing job gains, according to Wells Fargo economists Sarah House and Michael Pugliese wrote in a note.
But the storm clouds are gathering.
“With every month that passes, the tailwinds from post-lockdown hiring efforts are weakening, while the headwinds to hiring from tighter monetary policy are increasing,” they wrote. “The job market remains firm, but cracks are emerging. Unemployment claims are rising, job vacancies are declining rapidly and agency worker employment fell again in April, the latter being a useful indicator of marginal labor demand growth.”
Next: Key credit and inflation data and debt ceiling discussions
A lot can happen and there will be a lot of data falling before the next Fed meeting in June.
A number of key economic reports are due out next week, including Monday’s senior loan officer opinion poll, which will provide insight into lending conditions, and key inflation indicators from the consumer price index and producer price index.
Separately, President Joe Biden is expected to meet with congressional leaders for talks on raising the debt ceiling.
Not doing so would be “unprecedented,” Fed Chair Jerome Powell said this week, adding that the implications for the US economy could be highly uncertain and “rather averse”.
– CNN’s Matt Egan and Bryan Mena contributed to this report.