Wages Grow Steadily, Strong Job Growth in April Upsets Fed’s Push to Curb Inflation
More than four out of every five people in their prime working ages between 25 and 54 are now in the labor force. That rate has jumped in recent months — and it continues to rise above prepandemic levels.
Month after month, the unemployment rate for Black workers continues to hit record lows. Right now, unemployment across racial and ethnic groups is below 5 percent — though Black workers, on average, are out of work at a rate that is more than one and a half times higher than their white counterparts.
It’s not just the jobs data that investors are processing this morning. Following a dramatic decline Thursday, the share prices of some of the hardest-hit regional banks rallied on Friday, with PacWest up nearly 40 percent and Western Alliance rising nearly 30 percent.
There were modest job gains in industries across the board in April, as employers brushed off concerns about rising interest rates and a slowing economy. Even some rate-sensitive sectors continued hiring, though there were some signs of cooling.
Construction businesses added 15,000 jobs, reversing a slight decrease the previous month. Economic observers have been looking to the construction industry for signs of a more pronounced slowdown in the labor market. But the sector has defied expectations, adding jobs despite higher mortgage rates, even as there are signs that it may be leveling off.
Manufacturing added a slim 11,000 jobs after dipping in March. The sector has been slumping as retailers work through bloated inventories and higher interest rates dampen enthusiasm for big-ticket items.
Professional and business services added 43,000 jobs, though there was some variability below the headline number. While there were healthy gains in professional, scientific and technical services, there was a drop in administrative and support services, driven in large part by a loss of 23,000 jobs in temporary help services. That sector has been trending downward and has lost a net 174,000 jobs since March 2022, its peak.
Leisure and hospitality employment increased by 31,000, below its average of 73,000 jobs per month for the last six months but still a notable addition. The industry, which is still about 400,000 jobs below its prepandemic level, has raced to accommodate consumers eager to unload money especially at restaurants and bars despite concerns about a pullback in spending. Food services and drinking establishments alone added 25,000 jobs.
Retail trade added 7,700 jobs after a marginal decline in March. The sector has been relatively steady for more than a year and is at roughly the same level as in April 2022.
The unemployment rate was 3.4 percent, down from 3.5 percent in March, and matched the level in January, which was the lowest since 1969.
It’s also an indication that the failure of three banks and the resulting pullback on lending, which is expected to hit smaller businesses particularly hard, hasn't yet put the brakes on job creation.
“All these things are telling us it’s not a hard stop; it’s creating a headwind, but not a debilitating headwind,” said Carl Riccadonna, chief U.S. economist at BNP Paribas. “A gradual downturn is happening, but it sure is stubborn and persistent in the trend.”
Downward revisions to previous two months altered the spring employment picture meaningfully, subtracting a total of 149,000 jobs. That brings the three-month average to 222,000 jobs, a clear slowdown from the 400,000 added on average in 2022.
Since early 2021, the labor market has been uncommonly tight as employers struggled to reverse a sudden mass layoff and navigate huge shifts in the demand for goods and services. The unemployment rate reached its lowest point since the 1960s. Wages at the low end of the pay scale rose faster than they had in decades.
All of that has benefited groups that have historically been at a disadvantage in the labor market. The unemployment rate for Black Americans reached its lowest point on record in April, at 4.7 percent, and the gap between the unemployment rates of white and Black people was also the smallest ever measured. The share of working-age people participating in the labor market reached 83.3 percent, matching a level not seen since 2008.
In recent months, that exceptional mismatch between the supply and demand for workers has been coming into balance. Job postings, which had reached nearly double the number of available workers, tumbled in the first quarter. And a rebound in immigration eased labor shortages, especially in fields like leisure and hospitality and health care, allowing those to continue to grow quickly.
