On Friday, the Department of Labor released an employment report with the latest figures on unemployment and labor market dynamics in April. The document notes that the unemployment rate has fallen to more than 3.4%, its lowest level in 50 years.
At the same time, there is an acceleration in job growth – in April, 253,000 new jobs appeared in the United States in the non-farm sector.
These figures are a testament to the resilience of the labor market and could influence the decision of the United States Federal Reserve (Fed) to keep interest rates higher for longer, as the Fed tries to combat high inflation. , which is now the highest level in the United States in 40 years.
On Wednesday, the Federal Reserve, which serves as the central bank, following the results of the May meeting, increased the range of base interest rates by an additional 25 basis points – up to 5.00% – 5.25% per year. The rate was raised for the tenth consecutive time. Until March 2022, it was 0 to 0.25%. This is a fast pace, but it may take time for the economy to feel the effect of the base rate increase.
At the same time, the Fed is signaling that it may suspend the sharp tightening of its monetary policy. Current Fed policy has been compared to unprecedented moves in the 1980s, when the United States was struggling with high inflation.
“The Fed may have been wrong to suggest it was suspending rate hikes, because there is absolutely no evidence that the banking crisis is doing the job of tightening monetary policy than two or three rate hikes more could do,” he told Reuters in a comment Christopher Rupki, chief economist at FWDBONDS in New York.
The April jobs numbers are encouraging, compared to February and March 2023, when growth numbers were down 149,000 jobs from the second half of 2022, when the labor market added an average of 290,000 jobs per month.
The US economy needs to create 70,000 to 100,000 jobs every month to keep up with the growing working-age population.
Most jobs in April were in the service sector, with professional and business services adding another 43,000 jobs. But employment in unemployment assistance pennies, seen as an indicator of future hiring, has fallen 23,000 jobs and 174,000 jobs since March 2022.
Average hourly earnings rose 0.5% in April, after rising 0.3% in March. Wages rose 4.4% year-on-year in April, after rising 4.3% in March.
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