The long-awaited cooling in the labor market may have begun in April, when 175,000 weaker-than-expected wages grew and the unemployment rate rose to a modest 3.9%.
Wage growth is also slower, a sign that the Federal Reserve is trying to curb stronger inflation.
This number fell short of the 240,000 figure and followed a March increase of 315,000, initially revised upward from 303,000. Gains were strongest in healthcare, transportation, and warehousing, sectors that dominated business growth this year.
The Federal Reserve is unlikely to change its monetary policy on interest rates at the April level. With the central bank seeking to cool the labor market this year, inflation has proven more robust than expected.
The Fed raised interest rates on Wednesday, leaving consumers facing the highest borrowing costs on car loans, credit cards, and mortgages in more than two decades, but Fed Chairman Jerome Powell said it was “unlikely” the Fed would deliver interest rates this year.
“While lower-than-expected operating profits are rarely a welcome development, today’s report could be exactly what Jerome Powell was hoping for,” said Damien McIntyre, portfolio manager at Federated Herms. said Damien McIntyre, fund manager at Federated Herms “The last round is always the hardest; Powell reminded us about it on Wednesday that we just need to be patient.”
Experts say the labor market remains strong but has slowed over the last couple of years when jobs were plentiful but labor shortages followed the epidemic. The return of women to the workforce and increased immigration contributed to the labor supply. Meanwhile, wages are rising, but at a slower pace than a year ago.
“2024 will be kind of a makeover year,” says Jen Oates, senior policy adviser and former president of Working Nation.
“The more I look, the weaker the demand for employees has been,” says Julia Pollack, chief economist at ZipRecruiter. But he points out that monthly job growth of 264,000 in the first three months of the year is about 100,000 more than pre-pandemic levels. “They’re still very young.”
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Most recent hires have been for “standard” categories such as nurses, says Andrew Flowers, chief economist at App Cast, a technology company that helps companies with their recruitment advertisements and hospitality rather than “settle” into professional jobs. “You can’t replace a roof terrace or a waiter with a robot.”
In what could be a bigger sign of recession, Flowers says that by mid-2022, advertisements for HR professionals will fall to record levels and are now at pre-pandemic levels.
A bunch of economists are saying that the economy is starting to feel the heat from all those interest rate hikes the Fed keeps pulling. People are getting stuck with more debt, and businesses are getting all hesitant about spending money on investments and stuff.
Upcoming presidential elections and geopolitical tensions are also weighing on consumer and business sentiment, especially in the Middle East.
Sevin Yeltekin, dean of the Simon Business School at the University of Rochester, says: “I think with things like credit card debt, the uncertainty of the election, and the uncertainty of interest rates, we’re seeing some deterrence.
