There were some sizable downward revisions accompanying the April employment report that combined left employment in February and March 149,000 lower than previously reported; however, nonfarm payroll growth sprung back nicely in April from the revised March level. The unemployment rate, meanwhile, dipped to 3.4% from 3.5%, matching the 54-year low seen earlier this year in January.
The latter point notwithstanding, there are some elements of weakness in the data, namely that the average workweek remained at 34.4 hours, temporary help positions declined by 23,300, and persons unemployed for 27 weeks or more increased to 20.6% of the unemployed versus 18.9% in March. An attention-grabbing strong suit in the report, though, is that average hourly earnings were up 4.5% year-over-year versus 4.3% in March.
The key takeaway from the report is that it substantiates why the Fed isn’t inclined to cut rates soon, but at the same time the continued strength in the labor market after nine rate hikes (the 10th rate hike came after the data for April were collected) lends some hope to the idea that a soft landing for the economy is still possible.