Unemployment falls to new 3.6 percent historic low
“It’s clearly telling you this economy is still chugging along very nicely,” says one economist.
The U.S. economy accelerated its rebound from a recent soft patch as unemployment unexpectedly fell to a fresh 49-year low amid surprisingly strong hiring and cooler-than-projected wage gains, suggesting the hot labor market can extend its run.
Payrolls climbed by 263,000 in April after a downwardly revised 189,000 advance the prior month, according to a Labor Department report Friday that exceeded all estimates in a Bloomberg survey. The jobless rate unexpectedly fell to 3.6 percent while average hourly earnings growth was unchanged at 3.2 percent, below projections.
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U.S. stock futures extended gains after the report. The fed funds futures market briefly showed a slight reduction in odds for a Federal Reserve rate cut this year, before returning to where it was prior to the data, following calls from President Donald Trump and others for a reduction to support the expansion. Policy makers reiterated their patient stance this week as Chairman Jerome Powell cited “very strong job creation’’ while noting weaker inflation.
“It’s clearly telling you this economy is still chugging along very nicely,” Torsten Slok, chief economist at Deutsche Bank Securities, said on Bloomberg Television. “It is inflationary in the sense that wages did go up but they didn’t go up as much as we had expected.”
“Goldilocks is the best description of this,” Slok said.
The surprising overall robustness — which didn’t reflect any surge in temporary hires for the 2020 Census, as some analysts had flagged — follows months of broad labor market strength. While the expansion is poised to become the nation’s longest on record at midyear, economists expect a deceleration this year even after a strong first quarter.
However, the lower unemployment reading was due in part to a factor economists don’t always see as a healthy sign: The participation rate, or share of working-age people in the labor force, decreased to 62.8 percent from 63 percent.
Revisions for February and March added 16,000 more jobs than previously reported, while the three-month average fell to 169,000.
Friday’s data follow a Federal Open Market Committee statement Wednesday saying “the labor market remains strong.” Officials in March forecast a 3.7 percent unemployment rate at year end.
The payroll gains were somewhat uneven, with construction, health care, and professional and business services posting gains while retail employment fell by 12,000 for a third- straight decline.
Construction payrolls climbed by 33,000, the most since January, as manufacturing employment rose by 4,000. Factory employment was unchanged in the prior month after a previously reported drop.
Average hourly earnings rose 0.2 percent from the prior month after a revised 0.2 percent rise in the prior period. Wages for production and nonsupervisory workers accelerated to a 3.4 percent annual pace, signaling gains for lower-paid employees.
While the historically tight labor market has pushed companies to raise pay, inflation appears largely subdued, as the fatter paychecks don’t show any sign of fueling faster price gains.
At the same time, the average workweek got slightly shorter, boosting average hourly pay. The average for all private employees decreased to 34.4 hours, from 34.5 hours.
While temporary federal government hiring for the Census Bureau’s 2020 count may be poised to give nonfarm payrolls a boost, that wasn’t cited in the Labor Department’s report Friday. Federal employment excluding postal jobs rose by 12,500, still the most since 2010, to 2.21 million.
Other details
The U-6, or underemployment rate, held at 7.3 percent; the gauge includes part-time workers who’d prefer a full-time position and people who want a job but aren’t actively looking. Private employment rose by 236,000 after increasing 179,000; government payrolls climbed by 27,000.
Read more:
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- Power shifts to the job seeker in today’s hiring market
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