- The US added 428,000 payrolls in April, beating the median estimate for 391,000 new jobs.
- The unemployment rate held at 3.6%, missing the 3.5% forecast.
- The April report is the first to show how higher interest rates are affecting the jobs recovery.
The labor market's recovery held strong in April as higher interest rates did little to slow companies' rapid pace of job creation.
The economy added 428,000 nonfarm payrolls last month, according to data published Friday by the Bureau of Labor Statistics. Economists surveyed by Bloomberg had a median estimate of 391,000 new jobs. The increase shows no change from the job creation seen in March, which was revised to 428,000 payrolls from 431,000.
The government's count of February payrolls was also updated, falling to 714,000 in the final reading from 750,000.
The unemployment rate held at 3.6%. That landed above the 3.5% rate economists projected. The rate now sits at the same record low seen before the pandemic, offering yet another sign of just how tight the labor market has become.
Job gains were widespread through the month, but service sectors hit hardest by the pandemic crash continued to lead the recovery. Leisure and hospitality businesses added 78,000 payrolls, with 44,000 new jobs coming from restaurants and bars. Manufacturers followed with a 55,000-payroll gain. Employment in the transportation and warehousing sector rose by 52,000 jobs.
Job counts were little changed in the construction, information, and government sectors, according to the report. Subsectors including employment services, department stores, and furniture manufacturing saw mild declines in employment.
Despite strong overall payroll growth, there were still roughly 100 million Americans not participating in the workforce in April, meaning they either weren't working or hadn't looked for work in the past four weeks. That large number of non-participating Americans has helped the unemployment rate drop so quickly, as they aren't counted in the measure. As more people rejoin the workforce and are counted as unemployed, it's possible the rate will climb again.
The Friday report is the first to reveal how hiring fared after the Federal Reserve's first pandemic-era interest rate hike. The central bank raised rates on March 16 by 0.25 percentage points, kicking off a cycle of increases that aim to weaken demand and cool inflation. As borrowing gets more expensive, businesses will likely slow their hiring plans and settle into a more moderate growth pace.
The March jobs report only covered the period up to the middle of last month, meaning it didn't capture the full effects of higher rates. With the Fed raising rates at an even faster clip on Wednesday, tighter monetary policy is set to hit the brakes even harder on job creation in the months ahead.
In a less encouraging sign, labor force participation slipped to 62.2% in April from 62.4%, marking the lowest level since January. The decline was entirely fueled by a decline in female participation, with the rate dropping to 76.2% from 76.5% for prime-age women.
The persistent imbalance between job openings and workers to fill them continued to lift wages at a historically fast pace. Average hourly earnings rose by $0.10, or 0.3%, to $31.85 in April, just missing the average estimate of a 0.4% gain. The print signals strong wage pressures remained after workers enjoyed record-breaking pay growth through the first quarter.
There's little indication the labor shortage will ease any time soon. Job openings hit a record 11.5 million in March, according to government data published Wednesday. That pulled the ratio of available workers to openings down to 0.5, meaning there were two openings for every worker able to fill them.
Quits, meanwhile, soared to a record 4.5 million. That marked the tenth consecutive month to feature more than 4 million walkouts. Americans tend to quit when they're confident they can easily find a higher-paying job elsewhere, and the persistence of elevated quitting suggests workers are still enjoying historic bargaining power in the healing economy.