April jobs report preview: Wages, job gains set to slow while unemployment holds steady

The US labor market cooled notably in April as both hiring and wage growth slowed more than economists had expected in the first month of the second quarter.

In April, the US economy added 175,000 new jobs and the unemployment rate rose to 3.9%, new data from the Bureau of Labor Statistics showed Friday. Wall Street economists had expected nonfarm payrolls to rise by 240,000 and the unemployment rate to remain at 3.8%, according to Bloomberg data.

Wages also rose less than forecast, with average hourly earnings rising 0.2% over last month and 3.9% over the last year. Economists had expected to see a monthly jump of 0.3% in April and a 4% rise over last year.

Friday's report also showed February's job growth revised down — to a gain of 236,000 nonfarm payroll jobs from the 270,000 previously reported — while March's report was revised up to job gains of 315,000 from the 303,000 initially reported.

Ahead of Friday's report, economists had also flagged revisions as important to watch as the last year has seen the average month's payrolls gains revised down by 13,000 jobs.

The April jobs report also showed the length of the average workweek fell last month, to 34.3 from 34.4. The underemployment rate, which includes the unemployed and those marginally attached to the workforce, rose to 7.4%.

By industry, the narrow gains in the labor market seen this year continued, with healthcare and social assistance employment increasing by a combined 87,000, accounting for almost exactly half the overall growth in nonfarm employment.

Retail and transportation and warehousing were the only two industries outside of healthcare and social assistance that saw payroll growth north 20,000 last month.

Earlier this week, data from the BLS suggested wage pressures building after the Employment Cost Index (ECI) accelerated in the first quarter of 2024 to reach its highest level in a year.

In a press conference on Wednesday, Fed Chair Jerome Powell downplayed the idea that wage pressures today are creating a meaningful inflationary impulse, noting "essentially all wage measures have come down substantially" from peaks reached after the pandemic.

Average hourly earnings, for instance, grew more than 5% annually during each month between September 2021 and December 2022.

"Forward-looking indicators like the JOLTS quits rate point to more slowing in wage growth," wrote Nancy Vanden Houten, lead US economist at Oxford Economics, in a note ahead of Friday's jobs report.

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