The US labor market continues to show strength, with the April jobs report revealing an unexpected increase of 253,000 nonfarm payroll jobs added to the economy. The unemployment rate also fell to 3.4%, its lowest level since May 1969. Economists had predicted an increase of only 185,000 jobs and an unemployment rate of 3.6%. Average hourly earnings also exceeded expectations, rising by 0.5% month-on-month and 4.4% year-on-year.
Although job gains for March were revised lower to 165,000, employment gains in the last six months have still averaged 290,000. Education and healthcare services saw the largest gains, with an increase of 77,000 workers last month. Business services and leisure & hospitality also saw job growth, rising by 41,000 and 31,000 respectively. Construction and manufacturing jobs increased by 15,000 and 11,000 respectively.
Despite the strong performance of the labor market, experts suggest that it may not be enough to prevent a recession. However, it should reduce market expectations of rate cuts. The Federal Reserve also raised its benchmark interest rate by 0.25%, bringing the fed funds rate above 5% for the first time since September 2007. Fed Chair Jay Powell noted that the labor market remains tight, but some signs suggest a better balance between supply and demand.
Overall, the April jobs report indicates a robust labor market, with unexpected increases in employment gains, wage growth, and a drop in unemployment rate.
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