US employers scale back hiring in April
WASHINGTON — The nation’s employers pulled back on their hiring in April but still added a decent 175,000 jobs in a sign that persistently high interest rates may be starting to slow the robust US job market.
Friday’s government report showed that last month’s hiring gain was down sharply from the blockbuster increase of 315,000 in March. And it was well below the 233,000 gain that economists had predicted for April.
Yet the moderation in the pace of hiring, along with a slowdown last month in wage growth, will likely be welcomed by the Federal Reserve, which has kept interest rates at a two-decade high to fight persistently elevated inflation. Hourly wages rose a less-than-expected 0.2% from March and 3.9% from a year earlier, the smallest annual gain since June 2021.
The Fed has been delaying any consideration of interest rate cuts until it gains more confidence that inflation is steadily slowing toward its 2% target. Rate cuts by the central bank would, over time, reduce the cost of mortgages, auto loans and other consumer and business borrowing.
Stock prices jumped and bond yields fell Friday after the jobs report was released on hopes that rate cuts might now be more likely sometime in the coming months.
“A slowdown in payrolls to a decent pace to start the second quarter, coupled with a slowing in wage gains, will be welcome news to (the Fed’s) policymakers,” said Rubeela Farooqi, chief US economist at High Frequency Economics. “Current readings also support the view that rates cuts – and not hikes – are the base case scenario for the Fed this year.’’
The state of the economy is weighing on voters’ minds as the November presidential campaign intensifies. Despite the strength of the job market, Americans remain generally exasperated by high prices, and many of them assign blame to President Joe Biden.
Even with the April hiring slowdown, last month’s job growth amounted to a solid increase, though it was the lowest monthly gain since October. With the nation’s households continuing their steady spending, many employers have had to keep hiring to meet their customer demand.