According to the jobs report for April 2024, the US economy added fewer jobs than anticipated in April. The report also showed that the unemployment rate increased. This has raised expectations that the Federal Reserve might reduce interest rates in the near future.
All About Jobs Report April 2024
According to the April 2024 Jobs Report, nonfarm payrolls increased by 175,000, which was below the expected 240,000, according to the Labor Department’s Bureau of Labor Statistics. The unemployment rate also increased to 3.9%, compared to the anticipated steady rate of 3.8%.
The jobs report for April 2024 also showed that average hourly earnings increased by 0.2% from the previous month and 3.9% from a year ago. However, both data were below consensus estimates.
According to the April Jobs Report, the unemployment rate also reached its highest level since January 2022. Another measure that includes discouraged workers and part-time employees increased to 7.4%, the highest since November 2021. The labor force participation rate, consisting of those actively seeking employment, remained at 62.7%.
The stock market was already set for a higher start, and futures linked to major indices increased after the jobs report. Treasury yields decreased after staying mostly unchanged before the jobs report’s release. The jobs report for April 2024 report shows a scenario where growth continues without being so fast that it pushes the Fed to tighten policy further.
What the Economists Are Saying About the April Jobs Report
Dan North, senior economist at Allianz Trade, said that this April jobs report shows the situation is just about right. At this stage in the economic cycle, the economy has seen interest rates increase, so some slowdown in the labor market is expected. But overall, employment levels remain quite high.
The jobs report showed that the healthcare sector saw the most job growth, adding 56,000 positions. Other sectors with notable increases were social assistance, transportation and warehousing, and retail. According to the April jobs report, construction added 9,000 jobs, while government employment increased by 8,000 positions compared to an average of 55,000 over the past year.
The April jobs report follows the Federal Reserve’s recent decision to keep borrowing costs unchanged. They have decided to maintain the rates between 5.25% and 5.5%, the highest in over 20 years. Despite Chair Jerome Powell’s saying that the job market is strong, concerns have started rising about high inflation and the lack of progress in meeting the Fed’s 2% target.
However, market sentiment changed after the jobs report showed a slight decrease in job growth and wage increases. According to data from CME Group, traders are now expecting two interest rate cuts by the end of 2024, with the first expected in September.
Seema Shah, chief global strategist at Principal Asset Management, said that this job report aligns with what the Fed would have hoped for. The unexpected slowdown in job growth and the decrease in average hourly earnings growth may open discussions about rate cuts in the market. This could also explain Powell’s dovish stance on Wednesday.
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