US employment report disappoints

The US labor market failed to meet expectations in April. Only 175 thousand new jobs were created.

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Dr Christoph Balz

Commerzbank Economic Research

May 6 2024

In addition, the unemployment rate rose slightly to 3.9%. At the same time, wages rose less than expected. The data should therefore dampen speculation about an inflationary overheating of the economy and that the next Fed move could be a hike.

The data ...

In April, job growth in the US amounted to only 175k, significantly less than expected (consensus 240k, Commerzbank forecast: 250k). In addition, the level in March was revised downwards by 22k. The unemployment rate rose slightly from 3.8% to 3.9% (consensus and Commerzbank forecast: 3.8%).

... and the interpretation

Employment growth slowed sharply from 315 thousand in March to 175 thousand in April. However, it remains to be seen whether this represents the start of a new trend. After all, the figures have fluctuated strongly in recent months and have often been revised significantly. In any case, the trend as measured by the six-month average remained virtually unchanged.

Overall, a slowing job creation would be consistent with other labor market indicators that are tending to weaken, such as a the falling number of job vacancies and a decreasing tendency among employees to quit jobs - apparently because there are fewer alternatives. However, there are no signs of an outright slump. The significant decline in employment growth from March to April is likely to exaggerate the extent of the slowdown. In particular, government employment slowed significantly (+72 thousand in March, +8 thousand in April) and the weakness in construction (+40 thousand in March, +9 thousand in April) could be weather-related.

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