The US job market remained hot last month, the Labor Department said on Friday. The data show strong growth in employment, wages rising but not keeping up with inflation, and a labor force participation rate — the number of adults with jobs or looking for one — that remains below pre-pandemic levels.
What’s not clear is where we’re headed from here. Unemployment at these levels isn’t sustainable without further aggravating inflation. Something has to give, or a recession only gets more likely as the Federal Reserve is forced to jack up interest rates much higher than planned.
Here are the key numbers for April.
Unemployment rate: Unchanged at 3.6 percent. That is 0.1 percentage point above the rate in February 2020, immediately before COVID hit. Based on this measure, the job market is extremely tight.
Hiring: Employers added 428,000 jobs, matching March’s payroll gain. The April total was above economists’ forecasts, but the tallies for the previous two months were reduced. So it’s a wash. The economy has added an average of 523,000 jobs over the past three months, a torrid pace. Payrolls are now about 1.2 million workers lower than the pre-pandemic peak.
Wages: Average hourly wages rose 5.5 percent over a year earlier, down from 5.6 percent in March and below the inflation rate, which hit 8.5 percent last month. Some analysts took this slight decline as a sign that wages won’t necessarily drive inflation higher.
Labor force participation rate: This measure dipped 0.2 percentage point to 62.2 percent. With job openings at a record high, this number needs to go higher to ease the shortage of workers. The number of people marginally attached to the labor force — that is, they say they want a job but haven’t looked for the past four weeks, increased by 262,000 in April to 1.6 million.
According to the Labor Department, job gains were broad-based, with the exception of the construction, information, and government sectors, where there was little change.
Employment in leisure and hospitality increased by 78,000 in April, but is 1.4 million jobs shy of the February 2020 mark, a shortfall of 8.5 percent. Employment in transportation and warehousing rose by 52,000, bringing the increase since the start of the pandemic to 674,000. Health care employment rose by 34,000 but is off by 250,000 jobs, or 1.5 percent, since February 2020.
The bottom line: The April employment data probably won’t change the Federal Reserve’s plan to raise interest rates throughout the year. Inflation has to cool off, and that means taking steam out of the economy — and the job market.