The US labor market added 428,000 jobs in April – another month of solid payroll growth.
Job growth was widespread across sectors of the economy, with leisure/hospitality up 78,000; solid gains were also observed in manufacturing (55,000), transportation/warehousing (52,000) and professional services (41,000) as well as health care (34,000).
Wage growth also remains solid, rising for all workers and a bit more for production/nonsupervisory employees. Over the past 12 months, wages for the latter group have risen 6.4% – a solid increase, though no better than the inflation rate right now (and lower than some measures of price growth).
All of this is consistent with a labor market that remains very tight, with employers struggling to fill job vacancies. Indeed, we learned earlier this week that the job vacancy rate is now 7.1% – virtually twice the unemployment rate (3.6%), which is historically quite unusual.
One surprise appeared in the household data: labor force participation dipped by 363,000, while 1.2 million fewer workers are in the labor force than in the pre-pandemic numbers. The dip can be observed among men as well as women, and teens as well as mature workers; and it is greater among Whites than Blacks.
Labor force activity had been gaining ground in previous months, as workers seemed to be drawn back to a market where jobs were plentiful and wages were rising. Whether this is a temporary pause, or the signs of an end to workers returning to the market, remains unclear; if it is the latter, it will add to labor market tightness, and to the difficulty employers have finding and retaining workers.
Overall, the labor market remains very hot. The Federal Reserve will have to continue its efforts to raise interest rates to temper the overheating of the US economy, while workers still benefit from a tight labor market. Unfortunately, the war in Ukraine will continue to contribute to such inflation – creating the kinds of “supply shocks” over which the Fed will have little control. In this environment, whether the Fed can engineer a “soft landing” – in which jobs remain plentiful and we avoid a recession – remains to be seen.
Credit: www.forbes.com /