A Blockbuster Jobs Report
The US labor market added 263,000 jobs and the unemployment rate fell to 3.6 percent.
The US employment engine continues to create jobs in strong numbers. The labor market added 263,000 jobs in April, following strong growth of a revised 189,000 jobs added in March. The unemployment rate also indicated a strong economy, dropping from 3.8 percent in March to 3.6 percent in April. The April unemployment rate is the lowest in nearly 50 years. Wage growth remained constant at 3.2 percent in April.
Top Takeaways from the Report
The labor market continues to show strength
Early fears of an economic slowdown in 2019 seem to be softening. The April jobs report showed incredible strength in the US labor market. An astounding 263,000 jobs were added to the US economy in April, following the strong growth of a revised 189,000 jobs in March.
The number of jobs created in the April report came in much above the consensus forecast of 180,000 for the month. The economy has now added jobs for 103 consecutive months, adding to the long record of job creation in the current economic cycle.
The unemployment rate also reflected further strength in the economy, falling to 3.6 percent in April from 3.8 percent in March. This represents the lowest unemployment rate since December of 1969.
Part of the drop in unemployment is due to a drop in the labor force participation rate, which fell from 63.0 percent in March to 62.8 percent in April. The participation rate is an important indicator of the ability of the economy to engage potential workers in the job market. The US economy faces a demographic challenge of a declining labor force as greater numbers of Baby Boomers retire.
The jobs report also reflected continued strength in wage growth, which held at 3.2 percent in April. The steady growth in wages shows that inflation does not pose an immediate threat to the economy.
Continued Support for the Fed’s “Patient” Position on Interest Rates
The April jobs report further validates the Fed’s current position of being patient regarding interest rates. In 2018 the Fed increased rates four times, fearing that the tightening labor market would lead to spikes in inflation. However, inflation has remained below the Fed’s target rate of 2 percent, mitigating these concerns. Earlier this week, Fed President Jerome Powell reiterated his position that the central bank will remain on hold regarding either raising or lowering interest rates in the near future.
Growth by Select Industry
- The professional and business services sector added the largest number of jobs in April at 76,000. Over the past 12 months this sector has added 535,000 jobs. Other sectors seeing strong growth in April included construction, health care, and social assistance.
- The manufacturing sector rebounded after declining in March, adding 4,000 jobs in April. Manufacturing job growth in the U.S. represents an exception to the global trend of a decline in manufacturing.
- Employment in the retail sector continued its decline for the third month, shedding 12,000 jobs in April.
The Bottom Line
April’s employment report is a sign of continued strength in the US labor market, with an increase of 263,000 jobs and an unemployment rate of 3.6 percent. Additionally, the US Gross Domestic Product grew at an unexpectedly high rate of 3.2 percent in the first quarter of 2019, reflecting broad based strength in the economy. Overall, the US economy continues to show strength as it heads into the longest expansion in US history
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