Unemployment in the US fell slightly to 4.4 percent in April as the economy added 211,000 jobs, the Bureau of Labor Statistics reported on Friday. Underemployment is also on the decline, with the number of involuntary part-time workers (employed part time for economic reasons) falling by 281,000 to 5.3 million last month, contributing to a total decrease of 698,000 last year. Wages continued to grow at a slow pace of 2.5 percent year-over-year, better than nothing but short of the growth the Federal Reserve wants to see, which would be closer to 3.5 percent.
Job growth in April exceeded analysts’ expectations, which had been in the 180,000-190,000 range. March’s job creation numbers were revised downward by 19,000, but February figures were revised upward by 13,000, adding up to only a modest downward adjustment. Still, challenges remain in the US labor market, one economist points out to the New York Times:
Payrolls in the leisure and hospitality industry led the way, followed by health care and financial and professional services. “They’re not buying cars, but they’re buying vacations,” said Diane Swonk, founder of DS Economics in Chicago. Though the official jobless rate dipped even lower, the labor participation rate fell slightly to 62.9 percent last month from 63 percent, a signal that workers who had been sidelined are not being drawn back into the labor market.
“This gets to be the real issue,” Ms. Swonk said. “As good as this report is, it points to how hard it is to bring in those marginalized workers. With skills erosion, people in long-term unemployment have gotten into a vicious cycle. An incoming tide does not lift all boats.”
While March’s lackluster jobs report called into question the Federal Reserve’s plans to raise its benchmark interest rate again this year, last month’s more robust figures put it back on track to do so. The Wall Street Journal predicts that the Fed is likely to raise rates in June and again in September, and may also begin winding down its bond portfolio later this year.