US job growth begins to slow

Economists polled by Refinitiv expect Friday’s closely watched monthly jobs report to show the economy added just under 400,000 jobs in April. That would be the slowest job growth since April of last year.

Compared to the biggest gains in the recovery, the figure looks disappointing, even if it would mean the economy would be just 1.2 million fewer jobs than the total number of jobs lost during the pandemic.

“Some might say [job growth is] is normalizing as the economy approaches peak employment,” ADP chief economist Nela Richardson told reporters on Wednesday, adding that she thinks the return to normal will be bumpy.

On Wednesday, the ADP jobs report, which tallies private sector payrolls, came in below expectations, with just 247,000 jobs added in April.

The government’s official unemployment rate is expected to fall to a new pandemic-era low of 3.5%, matching the all-time low before Covid hit. The last time unemployment was this low before 2019 was in 1969.

The bottom line: Friday’s report should still be pretty good overall, especially compared to the pre-pandemic period. But it is also clear that the pace of the recovery has entered a new phase.

Weekly jobless claims returned to pre-pandemic levels months ago. Data released on Thursday showed that 200,000 workers last week filed initial claims for unemployment, adjusted for seasonal fluctuations, slightly above expectations and the previous week’s level.

Continuing claims, which count workers who have applied for benefits for at least two consecutive weeks, fell below 1.4 million to the lowest level since January 1970, the Labor Department reported. The four-week average of that figure was just above 1.4 million, the lowest level since February 1970.

Inflation hurts hiring

Meanwhile, the inflation problem in the United States is also affecting the hiring market. As consumers see prices rise on everything from food to rent and gas, companies must raise wages to compete with talent. This hits small businesses particularly hard and means they can’t hire as much as they otherwise would.
In March, the country had a record number of jobs available – 11.5 million – data from the Bureau of Labor Statistics showed earlier this week. The number of workers voluntarily leaving their jobs also hit an all-time high at 4.5 million in March, but hirings still exceeded departures.

Even though these numbers are a month older than Friday’s employment numbers, they are an indication of the appetite for hiring, which should have remained strong in April.

As for the summer months, any relief on the inflation front could also help. Manufacturing, for example, could see more job growth, and leisure and hospitality are also increasing seasonal hiring, Richardson said.

The April jobs report is due out Friday at 8:30 a.m. ET.


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