The latest US jobs report from the Bureau of Labor Statistics shows that employers added 253,000 jobs in April, which is a significant increase compared to what economists had predicted. The labor market’s resilience is a great thing for job seekers and workers, as it indicates that anyone looking for a job can find one easily. Despite high prices, rising interest rates, and banking uncertainty, the US labor market continues to chug along. For the past three months, average job growth has been 222,000.
While this is above the average monthly gain of 183,000 seen in the decade before the pandemic, it is still below what was seen during the economic rebound of the past two years. Businesses are still trying to hire, but it is a little bit easier to find workers now. The ongoing resilience of the labor market also helps bolster hopes that the Federal Reserve can bring down inflation without jettisoning millions of people to the unemployment rolls and triggering a recession.
The Black unemployment rate fell to 4.7% in April, compared with 5% the prior month. That marks the lowest level on records that go back to 1972 and is a sharp drop from 5.7% as recently as February. However, the rate decline was accompanied by a drop in Black labor force participation and employment. The Black unemployment rate is still too high, and due to the impact of structural racism on the labor market, Black and Hispanic workers have much higher unemployment rates than White workers.
Wage growth also picked back up in April, with average hourly earnings growing by 16 cents or 0.5% to $33.36, the biggest month-over-month gain since March 2022. Strong wage growth complicates the Federal Reserve’s mission to bring down price increases because higher labor costs could put upward pressure on inflation.
Despite the positive report, “cracks are emerging.” The first four months of the year have seen job growth average 285,000 per month, more people participate in the labor market, and job gains occur in even the most challenged sectors, such as manufacturing and construction. However, there are still concerns that the Fed’s inflation-busting campaign could result in many Americans losing their jobs. Higher borrowing costs could reduce demand and prices, which could have a negative impact on the labor market. The more stubborn the resilience in job and wage gains, the longer the Fed will need to remain in a restrictive monetary stance, and the bigger the chance of an economic downturn at some point this year.
The US labor market is still chugging along, and the latest jobs report shows that employers are continuing to hire. The Black unemployment rate has fallen to a record low, but there is still more work to be done to ensure that Black and Hispanic workers have the same employment opportunities as their White counterparts. Strong wage growth is good for the consumer and the economy, but it complicates the Federal Reserve’s mission to bring down price increases. “Cracks are emerging,” and it remains to be seen how the Federal Reserve will react to keep the US economy stable in the coming months.