U.S. job growth rebounded sharply in April and the unemployment rate dropped to 4.4 percent, near a 10-year low, pointing to a tightening labor market that could seal the case for an interest rate increase next month despite moderate wage growth.
Nonfarm payrolls surged by 211,000 jobs last month, the Labor Department said on Friday, well above the monthly average of 185,000 this year and a jump from the gain of 79,000 in March.
The job gains were broad-based, with hefty increases in leisure and hospitality, healthcare and social assistance as well as business and professional services.
The drop of one-tenth of a percentage point in the unemployment rate took it to its lowest level since May 2007. The decline reflected both an increase in hiring and people leaving the labor force.
"With continued solid job growth, the U.S. economic expansion will continue throughout 2017. The Fed will raise the federal funds rate again in mid-June as the economy is approaching full employment," said Gus Faucher, chief economist at PNC Financial in Pittsburgh.
The rebound in hiring supports the Federal Reserve's contention that the pedestrian 0.7 percent annualized economic growth pace in the first quarter was likely "transitory," and its optimism that economic activity would expand at a "moderate" pace.
The U.S. central bank on Wednesday kept its benchmark overnight interest rate, or federal funds rate, unchanged and said it expected labor market conditions would "strengthen somewhat further."
The Fed raised rates by a quarter of a percentage point in March and has forecast two more increases this year.
Prices of U.S. government debt fell after the employment data while U.S. stock index futures rose. The U.S. dollar .DXY initially gained against a basket of currencies before turning flat.
Average hourly earnings rose seven cents, or 0.3 percent, last month, partly because of a calendar quirk. While that lowered the year-on-year increase to 2.5 percent, the smallest since August 2016, there are signs that wage growth is accelerating as labor market slack diminishes.
Average hourly earnings increased 2.6 percent in March. A government report last week showed private sector wages recorded their biggest gain in 10 years in the first quarter.
U.S. nonfarm payroll employment rises by 211,000 jobs in April, jobless rate hits 4.4%
May 5, 2017 by Leave a Comment