WASHINGTON: US employment continued to increase at a robust pace in April and wage growth moderated, though a surprise drop in the participation rate suggests the labour market will remain exceedingly tight.
Nonfarm payrolls increased 428,000 in April, matching the prior month, a Labor Department report showed on Friday. The unemployment rate held at 3.6% as the size of the labour force declined. Average hourly earnings rose from a month earlier.
The solid payrolls advance suggests demand for labour remains strong. Job openings and resignations are back at record highs, and businesses are scrambling to hire enough workers to keep up with resilient consumer demand.
The extreme competition for workers has driven up wages at a rapid pace in recent months, but even so, many workers have not seen their incomes keep up with inflation.
Friday’s report suggests the pace of those increases may be beginning to moderate. Average hourly earnings rose 0.3% from March, falling short of economists’ estimates after an upward revision to the prior month. Earnings were up 5.5% from a year earlier.
A sustained softening in wage growth would be good news for the Federal Reserve as it seeks to subdue the fastest inflation in four decades. Chairman Jerome Powell said on Wednesday that the central bank hopes to temper demand for workers, with the aim to slow wage growth and inflation “without having to slow the economy and have a recession and have unemployment rise materially”.
Policymakers this week raised the Fed’s benchmark interest rate by half a percentage point, the biggest single rise since 2000, in an effort to combat rising prices, and Powell said hikes of such a size are on the table for upcoming meetings as well.