April Jobs Report Highlights Labor Market Strength

Labor market momentum continues; highlights underlying economic strength. S. employment continued to increase at a robust pace in April and wage growth (while still elevated) moderated slightly. A sustained softening in wage growth would be welcome by the Fed as it endeavors to tamp down the highest inflation levels observed in 40 years. The central bank hopes to temper demand for workers in order to slow wage growth and inflation without going so far as to cause a recession, which would be accompanied by higher unemployment. At the moment, there are nearly two vacant positions for every unemployed person in the U.S. as businesses scramble to hire enough workers to keep up with yet-resilient consumer demand. From our perspective, there appears to be enough underlying strength to provide some cushion for the blunt tools the Fed has to work with – and we believe the risk of a recession in the next twelve months remains low.

428K payrolls added in April – 48k more than expected. The U.S. labor market added 428k jobs in April, consistent with March levels and extending momentum in 2022. Forecasts for March ranged from +250K to +517K with a median of +380K so today’s outcome exceeded expectations. Job gains were again broad based, and led by leisure & hospitality (+78K), manufacturing (+55K), transportation & warehousing (+52K) and professional & business services (+41K). At this point, the economy counts 1.2 million fewer jobs than before the pandemic and essentially all of the change can be attributed to the leisure & hospitality sector which counts 1.4M fewer jobs. Employment in many other sectors is now well above February 2020 levels.
3.6% unemployment – unchanged compared to March. The U.S. unemployment rate was unchanged at 3.6% in April. Forecasts ranged from 3.4% to 3.7% with a median of 3.5%. The labor force participation rate fell slightly from 62.4% to 62.2% (compared to 63.4% pre-pandemic), while hourly earnings increased from $31.75 to $31.85 for all workers, up 5.5% over the last year. Average hourly earnings for nonsupervisory & productions workers rose from $27.02 to $27.12, up 6.4% over the last year.