Unemployment rate rises to 3.9% in US

U.S. job growth in April fell short of expectations, while annual wage gains cooled, prompting speculation about Fed interest rate cuts

In April, U.S. job growth decelerated more than initially anticipated, with annual wage increases also showing a slowdown. However, it seems premature to anticipate the Federal Reserve initiating interest rate cuts before September, given the continued tightness in the labor market.

According to the Labor Department’s Bureau of Statistics, nonfarm payrolls expanded by 175,000 jobs last month, a figure below economists’ expectations, although an upward revision was made for March, showing a rise of 315,000 jobs.

The consensus among economists had projected a payroll increase of 243,000, with estimates ranging from 150,000 to 280,000.

Despite the increase in the unemployment rate to 3.9% from 3.8%, it still remains below 4% for the 27th consecutive month.

Annual wage growth slowed to 3.9% in April, down from 4.1% in March, a range considered consistent with the Federal Reserve’s inflation target of 2%.

Fed opted to keep its benchmark interest rate steady at the current 5.25%-5.5% range during its Wednesday meeting, where it has remained since July.

While financial markets anticipate a start to the central bank’s easing cycle in September, a minority of economists believe this window is closing. Since March 2022, the Fed has raised its policy rate by 525 basis points.

Concerns regarding a significant slowdown in economic growth in the first quarter were reinforced by the recent moderation in payrolls. However, the slowdown in gross domestic product in the previous quarter was primarily due to a surge in imports, reflecting robust domestic demand.

Source: Newsroom