The U.S. Labor Department recently revealed that job growth in April was significantly lower than predicted. Despite consistent strong job growth reported over the previous months, non-farm payroll employment in April saw an increase of just 175,000 jobs, considerably less than the anticipated figure of 243,000.
This lower than expected rise in job growth can be partly attributed to a decelerated rate of growth in the leisure and hospitality sector which managed to add merely 5,000 jobs in April. On the other hand, the health care and social assistance sector, as well as the transportation and warehousing sector, continued to exhibit strong job growth.
The unemployment rate also saw a minor spike, raising to 3.9% in April, up from 3.8% in March, despite predictions that it would remain constant. This unexpected increase in unemployment is linked to an addition of 87,000 individuals to the labor force, contrasted by a rise of only 25,000 in the number of employed persons as per household survey measures.
FHN Financial Chief Economist, Chris Low said, "Today's report was a far cry from the kind of labor market weakness that would prompt a Fed rate cut. Nevertheless, more abundant labor and slower job and wage growth should help contain inflation, and that is the key to rate cuts."
The report also showed a slight increase in average hourly earnings by 7 cents, or 0.2 percent, taking it to $34.75 in April. The annual rate of wage growth fell to 4.0 percent in April from the earlier reading of 4.1 percent in March, which met the economists' expectations.