U.S. job growth soared less than expected in April and the unemployment rate dropped to near a 17-1/2-year low of 3.9 percent as some jobless Americans left the labor force.
The Labor Department’s closely watched employment report on Friday also showed wages barely rose last month, which could ease concerns that inflation pressures are rapidly building up, likely keeping the Federal Reserve on a gradual path of monetary policy tightening.
Nonfarm payrolls increased by 164,000 jobs last month, the Labor Department said on Friday. Data for March was revised up to show payrolls rising by 135,000 jobs instead of the previously reported 103,000.
That was still the fewest amount of jobs created in six months and followed an outsized gain of 324,000 in February.
While cold weather in March and April probably held back job growth, hiring is moderating as the labor market hits full employment. There has been an increase in reports of employers, especially in the construction and manufacturing sectors, struggling to find qualified workers.
The drop of two-tenths of a percentage point in the unemployment rate from 4.1 percent in March pushed it to a level last seen in December 2000 and within striking distance of the Fed’s forecast of 3.8 percent by the end of this year. It was the first time in six months that the jobless rate dropped.
But 236,000 people left the labor force in April. The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell to 62.8 percent last month from 62.9 percent in March.
Economists polled by Reuters had forecast payrolls rising by 192,000 jobs in April and the unemployment rate falling to 4.0 percent.
Longer-dated U.S. Treasury yields fell after the data. The dollar pared losses against a basket of currencies and U.S. stock index futures trimmed losses.
Average hourly earnings rose four cents, or 0.1 percent, last month after gaining 0.2 percent in March. That left the annual increase in average hourly earnings at 2.6 percent.
The average workweek was unchanged at 34.5 hours last month.
While average hourly earnings have suggested only a gradual increase in wage inflation, other measures have been more robust. The Employment Cost Index (ECI), widely viewed by policymakers and economists as one of the better measures of labor market slack, increased solidly in the first quarter.
The ECI report showed wages rising at their fastest pace in 11 years during the period, Reuters reports.
Even with the annual increase in average hourly earnings still moderate, inflation is flirting with the Fed’s 2 percent target.
