BIG MISS: Economy Adds Fewer Jobs Than Economists Were Expecting in April
Why it matters: The U.S. job market underperformed significantly in April, with nonfarm payroll employment rising by just 175,000 — far below economists’ expectations of 240,000. This marks a considerable deceleration from March’s revised gain of 303,000 and is the smallest monthly increase since October 2023.
By the numbers:
- Employment growth: April’s numbers indicate a cooling labor market, which could signal broader economic slowing.
- Unemployment rate: Increased to 3.9% from 3.8% in March, hitting a two-year high for the second time this year.
Sector highlights:
- Healthcare: Added the most jobs, with 56,000 new positions.
- Social assistance: Followed with 31,000 jobs.
- Transportation and warehousing: Saw an increase of 22,000.
- Construction: Posted a modest increase of 9,000 jobs, a sharp drop from March’s 40,000.
Wage growth: Average hourly earnings rose by 0.2% to $34.75, a slower pace than in March, and the monthly gains continue to lag behind inflation. Over the past 12 months, average hourly earnings are up 3.9%, down from 4.1% in March and the lowest level since June 2021.
- Note: Annual inflation is still outpacing inflation by 0.6 percentage points.
Between the lines: This slowdown in job creation and wage growth comes at a time when inflation is complicating the Federal Reserve’s path forward. This is the first big miss on a jobs report since January 2022 back when inflation was 7.5% and the 10-year was yielding around 1.75%.
Looking ahead: The April jobs report could be an indicator of a shifting economic landscape, where employers are more cautious amid uncertainties. This slowdown could potentially lead to adjustments in both market expectations and policy responses. The bond market reacted to the news by pushing the 10-year treasury yield below 4.5% for the first time since early April, reflecting increased investor caution.
