Welcome to our monthly video series on the jobs reports featuring our Chief Economist Sania Khan and Senior Director, Product Marketing, Jason Cerrato. Every Friday morning after the reports are released, grab a cup of coffee (or a margarita — happy Cinco de Mayo!) and join them for the latest on the jobs numbers.
The April jobs report exceeded expectations, adding more jobs to the economy than anticipated, signaling continued strong job gains despite the Fed’s efforts to cool the economy.
“It’s been an interesting morning,” Khan said. “We added 253,000 new jobs in the economy in April, expectations were 185,000 so it exceeded that quite a bit. Unemployment dropped to 3.4% from 3.5%. It’s still a very strong labor market, however, they did make two revisions for the last two months. Downward revisions at that, so we lost 149,000 jobs from the last two months, ‘lost’ meaning we had overestimated in the last two months.”
Additionally, the jobs report showed that wage growth is still strong, increasing by 4.4% over the year, despite the Fed’s efforts to limit it. The share of prime working-age adults in the workforce is on the rise and has surpassed pre-pandemic levels, with around 80.8% of 25-54-year-olds in the labor force.
Once again, Black workers hit a new milestone with unemployment at a record low of 4.7%, showing progress in reducing the racial employment gap. However, the leisure and hospitality sector, which added the most jobs, is still short by 402,000 jobs, or 2.4%, from its pre-pandemic level, and the government sector is also lagging behind.
In the construction industry, there has been a 3.8% growth in spending over the past year (Census Bureau), largely due to the increase in costs and interest rates, along with the surge in demand from federal funding and the construction of semiconductor plants.
Despite this spending growth, the latest jobs report shows that employment in the industry only grew by 15,000, while wages experienced a modest 0.4% growth. Additionally, JOLTS data indicates a 62% increase in layoffs within the construction industry from February to March. This suggests that although some areas of the construction industry are growing, there are still challenges that need to be addressed to ensure sustained growth in the sector.
“One of the things that I think about when I read the news is the best of times, the worst of times, and all of it at once,” Cerrato said. “Obviously, we beat some expectations, but it seems like there’s fewer job postings, and the labor market is tight. There are some positive signs, but it’s a little bit of mixed signals.”
With another interest rate hike earlier this week, there is a possibility that will pause, which could lead to a softer landing or temporary recession. However, despite rising inflation and stress in the banking sector, labor force participation remains strong and on the rise, consumers are still spending, and businesses are performing well. Overall, the economy appears to be slowing but in good shape.
Related content: Read our latest report on why skills are the key to successfully navigating a recession.
Here are some more key takeaways from the reports:
- The industries with the largest employment gains during April were professional and business services excluding temp agencies (+66,000), health care and social assistance (+64,000), and leisure and hospitality (+31,000).
- The prime working age labor force participation rate rose to 83.4% — the highest since 2008. A healthy labor market is pulling people back into the labor market.
- Although wage growth increased 4.4% over the year, this could be fluctuation in an overall downward trend.
- Employment in temporary help services is often seen as a future employment indicator and may be signaling a downturn in the near future as it continued to trend down over the month (-23,000) and is down by 174,000 since its peak in March 2022.
Join us for our next JOLTS and jobs fireside chat on June 2.
