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U.S. added 160,000 jobs last month as brisk hiring slowed

While the 160,000 jobs created in April was seen as a downshift, the still-healthy pace of hiring in the U.S. reported Friday contrasted with other economic signals that have been decidedly mixed recently.
While the 160,000 jobs created in April was seen as a downshift, the still-healthy pace of hiring in the U.S. reported Friday contrasted with other economic signals that have been decidedly mixed recently. The Associated Press

After months of gravity-defying gains, the U.S. jobs machine cooled in April as employers took their cue from other signs that economic growth was slowing.

The 160,000 increase in payrolls in April reported by the Labor Department on Friday came after the best two-year stretch for the job market since the tech-fueled boom of the late 1990s.

The unemployment rate, which is tied to a separate survey of households, stayed at 5 percent.

While a downshift, the still-healthy pace of hiring contrasted with other economic signals that have been decidedly mixed recently. Late last month, for example, the government reported that the economy barely expanded in the first quarter.

But most experts say the steady gains in the labor market in recent months are a more reliable sign, suggesting that the economy will continue to expand for the rest of 2016, with the pace picking up modestly from the stagnant start to the year.

“It’s a soft report, but it doesn’t portend a turn in the labor market,” said Michael Gapen, chief U.S. economist at Barclays. “I’d be more concerned if there were weakness across the board, but there wasn’t.”

The Labor Department also revised downward its estimate of the number of jobs added in February and March by 19,000. In the last three months, the economy has gained about 200,000 jobs a month on average.

Diane Swonk, an independent economist in Chicago, pointed to the strong gain of 67,000 jobs in the business and professional services category as additional evidence that the broader slowdown in hiring last month was not an ominous sign of trouble ahead.

“The quality of the jobs improved but the quantity did not,” she said, adding that the health of this heavily white-collar sector explained why wage growth was also robust.

The 0.3 percentage point rise in average hourly earnings was the most positive sign of the economy’s trajectory in Friday’s report.

Until a nascent pickup recently, wages had been a sore point throughout the nearly 7-year-old recovery, barely rising in real terms despite the big drop in the unemployment rate.

The change in earnings in April, which was in line with Wall Street’s expectations, suggested the upward tick in wages wasn’t a fluke. Over the last 12 months, wages are up 2.5 percent, well ahead of the pace of inflation.

Swonk said there were indications that wages were shoring up, even if the month-to-month pattern had been uneven. With dozens of states and cities either having already carried out or considering increases in the minimum wage, she explained, salaries at the low end of the job market are finally inching up.

“We’ve hit a tipping point,” Swonk said. “It’s showing up in low-wage jobs, for waiters and waitresses, in retail and in leisure and hospitality.”

States including California, Colorado, Michigan and Massachusetts increased their minimum wages at the start of 2016, while Maryland and the District of Columbia are set to enact raises on July 1.

The proportion of Americans in the labor force dropped last month to 62.8 percent from 63 percent in March, partially reversing a rebound that began last fall after the participation rate hit lows last seen in the 1970s.

Some notable pockets of weakness remain in the nation’s economy, especially in regions dominated by manufacturing and the energy industry. In the first three months of 2016, factories shed 47,000 jobs, hurt in part by a stronger dollar and weaker overseas demand. Manufacturing employment rose by 4,000 in April.

Oil producers are still reeling from the effect of sharply lower energy prices, despite a recent rebound.

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