Labor Market Stays Tight: April Jobs Report Reveals Growth In Nonfarm Payrolls, Wages

The April U.S. jobs report showed a 253,000 rise in nonfarm payrolls, up from a downwardly revised 165,000 the previous month and far above the market consensus estimate of 180,000, the Bureau of Labor Statistics reported Friday. 

The unemployment rate ticked down from 3.5% to 3.4%, against expectations of an increase to 3.6%. 

Average hourly earnings increased 0.5% month-on-month, up from 0.3% the previous month and above the 0.3% expected. In annual terms, the wage growth was 4.4%, up from the previous 4.3% and higher than the predicted 4.2%. 

Related Link: Friday's Jobs Number Could All But Guarantee That The Federal Reserve Takes Its Foot Off The Gas On Inflation

What To Know: 

• Nonfarm payrolls increased by 253,000 in April, above the market expectation of 180,000 and compared with the average monthly gain of 290,000 over the prior six months.
• The unemployment rate fell from 3.5% to 3.4% in April, matching a 50-year low of 3.4% seen in January. The number of unemployed persons was 5.7 million, declining from 5.8 million in March. 
• Average hourly earnings on U.S. private nonfarm payrolls rose by 16 cents, or 0.5% monthly, to $33.46 in April 2023, more than the market consensus of a 0.3% rise. 
• Employment continued to increase in professional and business services, health care, leisure and hospitality and social assistance. 
• Other significant sectors, such as construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information and other services, had no meaningful change in employment throughout the month.

Why It Matters: Labor market conditions are one of the primary economic indicators used by the Federal Reserve to assess policy. A tighter job market with elevated wage growth is one key factor that might keep the Fed on a restrictive stance for longer. 

Market Reaction: Futures on the S&P 500 index were flat in the minutes following the release. U.S. Treasury yields moved higher, with the 10-year yield jumping by 6 basis points to 3.45%, while the yield on two-year note rose 7 basis points to 3.89%. 

The dollar strengthened, with the dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF (ARCA: UUP), rising 0.3% and the EUR/USD pair down 0.4%. 

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