Jobless rate falls to lowest level since 2007
The U.S. economy added a robust 211,000 jobs in April, which was better than expected as the labor market rebounded after a weak start to the year.
The unemployment rate fell from 4.5 percent to 4.4 percent, the lowest since May 2007, before the recession started, the Labor Department reported on Friday.
Employers added 522,000 jobs during the first three months of the year, but March numbers were worse than initially reported. They were revised down by 19,000, to 79,000.
“This should ease fears of an abrupt decline in the labor market brought on by last month’s weak report, but reaffirms the longer-term trend of a gradual slowing in job creation,” said Curt Long, chief economist with the National Association of Federally Insured Credit Unions.
Job gains averaged 174,000 over the past three months.
Elise Gould, senior economist at the Economic Policy Institute, said that “there’s every reason to believe that [March’s figures were] a blip in an economy that is otherwise inching toward full employment.”
At full employment, job creation is expected to slow down and help boost wages.
House Ways and Means Committee Chairman Kevin Brady (R-Texas) said the “report shows our economy is making progress, and I’m confident we will accelerate this progress as we continue working with President Trump on our pro-growth agenda.”
But Sen. Martin Heinrich (D-N.M.), ranking member of the Joint Economic Committee, said Friday’s figures “continue to indicate the success of a growing economy inherited by President Trump.”
“Instead of building off of this growth handed to him by his predecessor, we have yet to see any clear plan on creating jobs and raising wages from the president or congressional Republicans,” Heinrich said.
But while the labor market is tightening, wages are growing at only a 2.5 percent annual rate.
Mark Hamrick, Bankrate.com’s senior economic analyst, said on wages “we’re hearing that familiar sad trombone sound.”
Gould said that in a healthy economy “we would expect to see wages growing at 3.5 percent to 4 percent, which would be in line with productivity plus the Federal Reserve’s target inflation rate.”
“We need to see this level of wage growth for a sustained period of time before the Fed should raise rates, and it’s clear we are not there yet,” she said.
The Federal Reserve on Wednesday left interest rates unchanged after raising the benchmark rate in December and March. But Fed officials expressed confidence in the nation’s economy and there are expectations that the Fed will vote for an increase at their June meeting.
The number of people employed part-time for economic reasons fell 281,000, to 5.3 million, in April. In the past year, those figures have dropped by 698,000.
Douglas Holtz-Eakin, head of the American Action Forum, said the latest report shows a labor market in the “home stretch of recovery from the Great Recession.”
Justin Wolfers, an economics professor at the University of Michigan, tweeted that “everything about this report looks pretty good.”
“The economy certainly shows no signs of either slowing, nor of accelerating,” Wolfers said.
In April, job growth occurred broadly across sectors, even those that have struggled in recent months.
Manufacturing added 6,000 jobs, its fifth straight months of gain, and construction payrolls rose by 5,000.
“Business leaders in the manufacturing sector are more upbeat in their economic outlook so far in 2017, with demand and production expanding modestly once again,” said Chad Moutray, chief economist for the National Association of Manufacturers.
“As a result, hiring appears to be less cautious this year, especially relative to the loss of 16,000 workers on net seen last year.”
Alliance for American Manufacturing President Scott Paul said that while manufacturing has added 70,000 jobs over the past five months, “indicators like slowing U.S. factory activity growth suggest that we still need to lay more tracks for the future.”
“Announcements and press releases may look great on the surface, but if the administration and companies like Apple and Wal-Mart want to fundamentally alter the future of domestic manufacturing, they’ll have to rise above the rhetoric and actually bring production jobs home,” Paul said.
Employment in mining rose by 9,000 in April. Since a recent low in October, mining has added 44,000 jobs, with most of the gains in support activities.
Retailers hired 6,300 after shedding 61,800 jobs in the first three months of the year.
“After big losses in the retail sector over the past two months, the sector posted a small gain, although it will remain soft given the continuing trend toward online sales,” said PNC’s chief economist Gus Faucher.
Economists are forecasting a stronger performance of up to 3 percent growth in the April-June period after it sagged to 0.7 percent in the first quarter, the lowest level in three years.
While the jobs news looks good for Trump, some economists argue that the gains are happening in a vacuum between the Trump and Obama administrations, and neither can take credit.
“Many investors have been hoping that there would be an immediate acceleration in growth following the president’s election, based in part on his ambitious claims and plans,” Hamrick said.
“But the president is learning that governing is more challenging than campaigning,” he said.
Updated at 10:02 a.m.
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