US job growth has risen sharply in April while the U.S. unemployment rate dropped to 4.4%. The two do not always occur as a result of each other. This indicates that the US job growth figures are not due only to an increase in jobs available. It also relates the unemployed and newly qualified finding work.
The 4.4% unemployment rate is almost a 10-year low, indicating that the labor market is increasing. This, in turn, indicates an increasing likelihood of an interest rate hike at the Fed meeting next month. Nonfarm employment has increased by 211,000. This comes after an increase of 79,000 in March.
The US job growth in April reflected increased vacancies in a wide range of employment sectors. These include hospitality, leisure, business, health care, social assistance and professional services. The 4.4% unemployment is the lowest since May 2007 – although only by 0.1%.
Nevertheless, the figure is encouraging for jobless and for young people seeking work. The Federal Reserve decided Wednesday to maintain the interest rate where it is, but stated that it expected employment to increase. This news is almost certain to result in a rate increase come June 14 – the date of the next fed meeting.
The elephant in the room is the growth in the working-age population. In order to keep job vacancies increasing along with that, the US economy must create at least 75,000 to 100,000 jobs every month – a big call! Nevertheless, this month’s news indicates that the country is going in the right direction. However, pay may not be!
Average earnings per hour increased in April by 7 cents. That equates to 0.3% increase. However, after taking downward revisions to previous months into consideration this relates to just 2.5% per year. As the unemployed numbers drop, then wage growth should increase – and this appears to be happening now.
In fact, in the first quarter of 2017, private sector pay experienced the biggest increase in 10 years. This will change as the country approaches full employment. For now, however, employment is going in the right direction. Vacancies are dropping along with the number of unemployed. All we need is wage growth to keep in line and everybody will be happy.
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