Strong US jobs data dims rate cut hopes as Kevin Warsh nears Fed chair confirmation
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The news: The US economy added 115,000 jobs in April, more than double the 55,000 analysts forecast, as the labour market held firm despite mounting pressure from the Iran war and surging energy prices.
The US Bureau of Labor Statistics also revised March’s figure upward to 185,000.
The unemployment rate held steady at 4.3%. Healthcare and social assistance led hiring with 54,000 new jobs, while transportation and warehousing added 30,000 and retail 22,000. The information sector lost 13,000 jobs in April, its 16th straight month of declines, according to Bloomberg.
Average hourly earnings rose 0.2% monthly and 3.6% annually, while the labour force participation rate fell to 61.8%, its lowest since October 2021, Bloomberg noted.
A broader underemployment measure rose to 8.2%, its highest this year, with 4.9 million Americans working part-time who would prefer full-time roles.
The context: The strong data comes as Kevin Warsh closes in on Senate confirmation to replace Jerome Powell next week. Warsh has expressed interest in cutting interest rates, but the April jobs print further diminishes what were already low odds of a cut this year, strengthening the hand of Fed officials who want to hold rates steady for an extended period.
Markets priced an 18% chance of a December rate rise after the release, down from 23% previously. The chance of rates staying on hold were 74.1%, up from 70.1% before the release, according to Reuters.
What they said: “The labor market is not booming, but it is proving harder to break than many feared,” Fitch Ratings head of US economics Olu Sonola said.
The sources: Bureau of Labor Statistics, Bloomberg, Reuters
