The United States labor market cooled notably last month, as both hiring and wage growth slowed more than economists had expected in April.
According to new data from the Bureau of Labor Statistics, the US economy added 175,000 new jobs and the unemployment rate rose to 3.9% last month. Wall Street economists had expected nonfarm payrolls to rise by 240,000 and the unemployment rate to remain at 3.8%, according to Bloomberg data.
Wages also rose less than forecasted, with average hourly earnings rising 0.2% over last month and 3.9% over the last year. Economists had expected to see a monthly jump of 0.3% in April and a 4% rise over last year.
The report also showed February’s job growth revised down – to a gain of 236,000 nonfarm payroll jobs from the 270,000 previously reported – while March’s report was revised up to job gains of 315,000.
The slowdown in wage growth is expected to help the case for the Federal Reserve to lower interest rates at some point this year. The central bank has been fighting inflation for about two years now and a tight labor market is seen by officials as a potential source of inflationary pressure. They want wage growth to “be consistent” with their inflation target of 2%, so cooling wage gains could help tug inflation lower.
US stocks soared higher after the data was released. The Dow opened more than 530 points higher, the S&P was up 1.2% and the Nasdaq Composite gained 1.8%.
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