US employers added 253,000 jobs in April, a sign that the resilient jobs market remains robust even after a year of Federal Reserve interest rate rises.
Labor market growth has been slowing over the last few months, from 472,000 jobs in January to a revised 165,000 in March. April broke that downward trend in growth, the Bureau of Labor Statistics (BLS) reported on Friday.
The unemployment rate fell slightly to 3.4%, a 0.1% decrease compared to March.
The gains were broad-based, with health, education and leisure and hospitality reporting the largest numbers of new jobs. Unemployment for Black Americans dipped below 5% for the first time but, at 4.7%, remained well above the 3.1% experienced by white Americans.
The figures further complicate the picture for the Fed which has been raising rates to cool the economy and bring down inflation. The hikes had been expected to dampen US hiring.
Economists had expected the US to add 180,000 jobs over the month. Recent data had pointed to signs that jobs growth has been slowing. The monthly Job Openings and Labor Turnover Survey, known as Jolt, for March was released by the BLS earlier this week and showed job openings were at their lowest level since April 2021, falling for a third month straight.
Layoffs increased to 1.8m, 248,000 more compared with last month and the highest number since December 2020. The construction industry saw the highest number of layoffs as the housing market has cooled with the rise of interest rates.
April’s job figures were released just two days after the Fed announced its 10th interest rate hike in just over a year, raising rates by a quarter-point to 5% to 5.25%, the highest rate in 16 years.
Fed officials on Wednesday had suggested they may stop interest rate rises in the near future as they see the effects play out in the economy.
“There are some signs that supply and demand in the labor market are coming back into balance,” the Fed chair, Jerome Powell, said at a press conference on Wednesday. He said the “economy is likely to face further headwinds from tighter credit conditions”, meaning the full effects of the interest-rate hikes have yet to be seen.
This marks a significant change in tone as Fed officials, especially Powell, have in the past reiterated that more rate rises would be needed to reach their target inflation rate of 2%. But now, the economy is “seeing the effects of our policy tightening on demand and the most interest-rate-sensitive sectors of the economy, particularly housing and investment”, Powell said.
Rather than signaling future increases, he added, “we will be driven by incoming data, meeting by meeting”.
Powell, at the Wednesday press conference, said he believes it is more likely than not that the US will avoid a recession, especially since unemployment is still low and the job market is still growing, but he said there was a possibility “that we will have what I hope would be a mild recession”.
Powell also noted that “the severe period of stress” of the banking crisis has been resolved, but almost immediately after the Fed’s interest rate hike. Shares of PacWest, a mid-sized bank based in California, started to tumble. Western Alliance, based in Phoenix, also saw its shares fall following news of PacWest. Both banks say they are not experiencing changes in their deposit flows.