Job Growth Slows in April as Unemployment Rises and Wage Growth Moderates

The anticipated softening of the labor market should have started with April’s paychecks growing by as few as the released reports show, at 175,000 as the labor rate rises slightly higher to 3.9%.

The wages naturally slowed that shows it up when the bank like the Central will try to tame inflation.

The figure has just been revised downward to 240,000, compared to the previous report which was at the level of 315,000 in March, revised up from its earlier 303,000. The largest increases were in healthcare, the largest contributing sector in job growth so far this year, and in transport and logistics.

This April level of unemployment principles the Federal Reserve to keep its interest rates unchanged. The central bank expects the labor market to cool down this year along with the implicit system of unruly inflation. It, unfortunately, turns out to be a much harder problem to solve than anyone expected.

On Wednesday, the Fed maintained interest rates at their high levels, leaving consumers facing the highest borrowing costs for car loans, credit cards and mortgages in more than two decades. But Fed Chairman Jerome Powell did say that it was “unlikely” the Fed would raise interest rates this year.

“While fewer than expected job gains are rarely a welcomed sight, today’s report might be just what Jerome Powell was hoping for,” said Damian McIntyre, portfolio manager at Federated Hermes. “The last mile is always the hardest, and Powell reminded us on Wednesday that we simply need to be patient.”

The authorities considered the job market to be strong, although less robust than the past two years in which jobs were being developed and workers overlapping due to the COVID-19 pandemic. The effect of the resumption of women’s work in the labor market as well as the immigration issue has contributed a lot to the supply side of labor. Wages, so to say, were also growing, but not as fast as they did a year ago.

“It will be a kind of settling year for the labor market of 2024, predicts Jane Oates, the former president of The Nation and a senior policy advisor at WorkingNation, in 2024.

“The more I look at it, labor demand has softened quite a lot,’ says Julia Pollak, chief economist at ZipRecruiter.” However, she also notes that the current pace of adding jobs at the level of addition of 264,000 monthly for the whole year by March is about 100,000 above the pre-pand

A large number of recruits have gone into the medical profession and the service sector which involves a lot of standing room for nurses and caregivers. This figure is complemented by that of the white-collar sector that is more composed of employees who sit all day. It involves among others, middle-level managers. “You can never substitute a roofer or a waiter with a robot.”

We may witness a similar case with the drop in the total number of advertisements for human resources workers. At peak, these adverts were nearly two times higher during the pandemic than before, but we are back to the same level as before.

Fed rate hikes for so long (which is the 12th time now) seem to show that the economy is starting to struggle. Consumers are getting saddled up with the mounting debt and companies don’t want to invest as much as they postpone shelf stocking.

The coming presidential election and geopolitical tensions, especially in the Middle East, are also weighing on consumer and business sentiment.

“I think we are seeing with credit card debt and other things inching up, the uncertainty over the election and interest rates, people are holding off somewhat,” says Sevin Yeltekin, dean of the Simon School of Business at the University of Rochester.