Employment continued to trend up in professional and business services, health care, leisure and hospitality, and social assistance. Meanwhile, unemployment has remained relatively stagnant at 3.4%, according to the report.
The numbers were released just one day after the U.S. Federal Reserve announced it would raise its key rate by a quarter-point – the 10th-consecutive increase this cycle. And while it’s unclear whether interest rates will continue to rise, Americans shouldn’t expect significant hits or savings in their wallet any time soon, University of Nebraska Omaha Economics Professor Chris Decker said.
“Even if prices are rising at 5%, but you got a pay increase at 4%, you kind of feel like you’re behind (and) like you’re not able to spend as much,” he said. “There is some truth to that, and that can happen on a sector-by-sector basis, but I do think that might even be narrowing.”
Fed Chair Jerome Powell seemed mystified by the job market’s durability, the Associated Press reported. He was concerned a robust job market puts pressure on wages and prices.
As of Friday, all signs pointed to a healthy labor market. Monday’s report of 253,000 new jobs compared with the average monthly gain of 290,000 over the prior six months and employment continued to trend up in several sectors.
Moving forward, however April’s job report may be seen as “a blip,” Decker said.
“We may get a couple of more good jobs reports going forward, but the trend will probably be toward smaller increases as a trend through the rest of 2023,” he said.
That could result in future price increases, but they’re not likely to have the same shock value they did a year ago, when inflation was about 10%.
Much of the employment increase economists are noticing now could be attributed to a persisting demand for labor, Decker said.
“(That) essentially means that businesses are still looking to hire,” he said. “And the number of people who are actively looking is a little bit smaller. The result is that people are being pulled into the labor market and wages are likely getting stronger.”
Labor is what Decker called a “lagging indicator” meaning that businesses likely made the hiring decisions we’re seeing now, before feeling the impact of factors like higher interest rates, he said.
“Businesses tend to make employment decisions once they observe (those) slowdowns,” Decker said. “There may very well be some uptick in employment, but that doesn’t necessarily mean that that will be sustained going forward.”