Skip to main content
The Globe and Mail
Get full access to globeandmail.com
Support quality journalism
Just $1.99 per week for the first 24weeks
Just $1.99 per week for the first 24weeks
The Globe and Mail
Support quality journalism
Get full access to globeandmail.com
Globe and Mail website displayed on various devices
Just$1.99
per week
for the first 24weeks

var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){console.log("scroll");var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))}pencilInit(".js-sub-pencil",!1);

U.S. job growth surged in April and the unemployment rate dropped to a more than 49-year low of 3.6 per cent, pointing to sustained strength in economic activity even as last year’s massive fiscal stimulus fades.

The Labor Department’s closely watched monthly employment report on Friday, however, showed steady wage gains last month, consistent with moderate inflation. The decline in the unemployment rate to the lowest level since December, 1969, was because people left the labour force, suggesting some slack in the jobs market remains.

The report was broadly supportive of the Federal Reserve’s decision on Wednesday to keep interest rates unchanged and signal little desire to adjust monetary policy anytime soon. Fed Chair Jerome Powell described the economy and job growth as “a bit stronger than we anticipated” and inflation “somewhat weaker.”

Story continues below advertisement

“Employment gains are strong enough to dispel any immediate concerns over the health of the economy, while wage gains are not strong enough to force the Fed’s hand to tighten the policy stance,” said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

Nonfarm payrolls increased by 263,000 jobs last month, amid gains in hiring nearly across all sectors. The economy created 16,000 more jobs in February and March than previously reported. Economists polled by Reuters had forecast nonfarm payrolls rising by 185,000 jobs last month.

The strong economy, especially the labour market, could boost U.S. President Donald Trump’s re-election hopes next year. Mr. Trump has touted the economy as being one of the big wins of his first term in office. The economy will celebrate 10 years of expansion in July, the longest on record.

Job growth is well above the roughly 100,000 needed a month to keep up with growth in the working-age population. The second month of strong job growth was further evidence that February’s paltry 56,000 increase in jobs was an aberration.

It also effectively put to rest concerns about a recession and diminished expectations of an interest rate cut this year that had been fanned by a brief inversion of the U.S. Treasury yield curve in March.

Hiring remains strong, despite anecdotal evidence of worker shortages in the transportation, manufacturing and construction industries, suggesting there is still some spare capacity in the labour market.

Steadily rising wages have on balance been keeping workers in the labour force and drawing back those who had dropped out. Average hourly earnings rose 6 US cents, or 0.2 per cent, in April after rising by the same margin in March. That kept the annual increase in wages at 3.2 per cent. Workers put in fewer hours in April. The average workweek fell to 34.4 hours from 34.5 hours.

Story continues below advertisement

Although wage growth is not strong enough to drive up inflation, it is seen sufficient to underpin economic growth as the stimulus from last year’s US$1.5-trillion tax cut wanes.

The economy grew at a 3.2 per cent annualized rate in the first quarter, driven by a surge in exports and inventories, quickening from the October-December period’s 2.2 per cent pace.

The dollar dipped versus a basket of currencies after the employment report, while U.S. Treasury yields were marginally lower.

The two-tenths of a percentage point drop in the unemployment rate from 3.8 per cent in March was because 490,000 people left the labour force in April. The jobless rate is now below the 3.7 per cent that Fed officials project it will be by the end of the year.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, was unchanged at 7.3 per cent in April.

The labour force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell to 62.8 per cent in April from 63.0 per cent in March. The participation rate hit a more than five-year high of 63.2 per cent in January.

Story continues below advertisement

Some economists expect job growth to slow this year as fewer workers become available, which will push up wages and lift inflation back to the Fed’s 2-per-cent target. An inflation measure tracked by the U.S. central bank increased 1.6 per cent in the year to March, the smallest gain in 14 months, from 1.7 per cent in February.

Employment at construction sites increased by 33,000 jobs in April, rising for a second straight month. Manufacturing sector payrolls rebounded by 4,000 jobs after being unchanged in March.

The industry is being pressured by layoffs in the automobile sector as assembly plants try to cope with declining sales and an inventory overhang.

Leisure and hospitality sector payrolls increased by 34,000 jobs last month. Professional and business services employment added 76,000 jobs last month. There were increases in health care, transportation and warehousing employment, as well as financial activities.

But retail payrolls fell by 12,000 job in April, declining for a third straight month. Temporary help, a harbinger for future hiring, rebounded last month after dropping in March.

Government payrolls increased by 27,000 in April, likely driven by early hiring for the 2020 Census.

Related topics

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies