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Economic News

United States: Job Creation Cools Slightly

May 3, 2024
Francis Généreux
Principal Economist

Highlights

  • According to the establishment survey, the US economy added 175,000 jobs in April.
  • Average hourly wage growth slowed to 0.2% in April, down from 0.3% in March. Year-on-year wage growth came in at 3.9%.
  • The household survey showed an even steeper decline in hiring, and the jobless rate rose 0.1% to 3.9%.

Comments

For the first time since October 2023, job creation fell short of expectations. The consensus had called for 250,000 hires in April. That being said, 175,000 new jobs isn't too shabby, especially in this high-interest-rate environment. After months of surprisingly strong economic growth—quarters, even—this slowdown in hiring is bringing us back to Earth. It's also worth noting that 982,000 jobs have been created in the United States since the beginning of 2024, which is still quite remarkable. It's a stronger start to the year than we saw at any point in the 2010s.

And while we're looking on the bright side, we can see that the share of industries where employment increased also rose. Out of the 250 industries, 60.4% posted gains in April, compared to 59.6% in March and 54% in February. As with other labour market indicators (unemployment claims, data on job openings and labor turnover, layoff announcements), we get the impression that businesses aren't likely to cut jobs, but gross hires aren't as lively as they've been in recent years.

The household survey also shows a slowdown in hiring. The weakness is even more pronounced, with just 25,000 newly employed persons. This also reflects a low growth in the workforce, which gained just 87,000 people. The jobless rate is back at 3.9%, where it was in February, and the underemployment rate (which includes unemployed discouraged workers and workers who are involuntarily part-time) rose to 7.4%, its highest point since late 2021. It had dropped to 6.5% by the end of 2022. It seems that the post-pandemic labour shortage is dissipating. This should help to further cool wage growth and eventually ease inflationary pressures in the services sector. 

Implications

Despite showing signs of a slowdown, the US labour market remains in good shape. In fact, the slower pace of hiring is welcome and even necessary to keep lowering wage pressures. Fed officials should be positive about today's results, as they reinforce the message that key rates won't be going up any time soon. All the same, sticky inflation will prevent any rate cuts before autumn. 

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