Please ensure Javascript is enabled for purposes of website accessibility
US Employers Scaled Back Hiring in April. How That Could Let the Fed Cut Interest Rates
gvw_ap_news
By Associated Press
Published 11 months ago on
May 3, 2024

U.S. job growth slows to 175,000 in April amid high interest rates, with unemployment ticking up to 3.9% and wage growth easing, signaling possible shifts in Fed policy. (AP/Kristen Norman)

Share

Getting your Trinity Audio player ready...

WASHINGTON — The nation’s employers pulled back on their hiring in April but still added a decent 175,000 jobs in a sign that persistently high interest rates may be starting to slow the robust U.S. job market.

Friday’s government report showed that last month’s hiring gain was down sharply from the blockbuster increase of 315,000 in March. And it was well below the 233,000 gain that economists had predicted for April.

Federal Reserve’s Response to Wage Growth Slowdown

Yet the moderation in the pace of hiring, along with a slowdown last month in wage growth, will likely be welcomed by the Federal Reserve, which has kept interest rates at a two-decade high to fight persistently elevated inflation. Hourly wages rose a less-than-expected 0.2% from March and 3.9% from a year earlier, the smallest annual gain since June 2021.

The Fed has been delaying any consideration of interest rate cuts until it gains more confidence that inflation is steadily slowing toward its 2% target. Rate cuts by the central bank would, over time, reduce the cost of mortgages, auto loans and other consumer and business borrowing.

Stock prices jumped and bond yields fell Friday after the jobs report was released on hopes that rate cuts might now be more likely sometime in the coming months.

“A slowdown in payrolls to a decent pace to start the second quarter, coupled with a slowing in wage gains, will be welcome news to (the Fed’s) policymakers,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “Current readings also support the view that rates cuts – and not hikes – are the base case scenario for the Fed this year.’’

The state of the economy is weighing on voters’ minds as the November presidential campaign intensifies. Despite the strength of the job market, Americans remain generally exasperated by high prices, and many of them assign blame to President Joe Biden.

Job Growth and Unemployment Rate

Even with the April hiring slowdown, last month’s job growth amounted to a solid increase, though it was the lowest monthly gain since October. With the nation’s households continuing their steady spending, many employers have had to keep hiring to meet their customer demand.

Though the unemployment rate ticked up from 3.8% to 3.9% in April, it was the 27th straight month in which the rate has remained below 4%, tying the longest such streak since the 1960s.

“Certainly a cooler jobs report than we’ve seen,’’ said Michael Pugliese, senior economist at Wells Fargo. “But it’s not like it was disastrous: 175,000 is still pretty strong, and unemployment below 4% is still pretty healthy.’’ He expects hiring, which averaged a vigorous 242,000 from February through April, to continue to decelerate.

Last month’s hiring was led by healthcare companies, which added 56,000 jobs. Warehouse and transportation companies added 22,000 and retailers 20,000. Government at all levels, which had been hiring aggressively, added just 8,000 jobs in April, the lowest monthly total since December 2022.

Local governments didn’t add any jobs at all last month. Paul Ashworth of Capital Economics noted that state and local government revenue has recently slumped.

Temporary help jobs fell by more than 16,000. These positions are often seen as a potential indicator of where the job market is headed because companies sometimes try out temps before committing to full-time hires.

The share of the adult population that either has a job or is looking for one was unchanged at 62.7%, well below pre-pandemic levels.

The Resilience of America’s Job Market

America’s job market has repeatedly proved more robust than almost anyone had predicted. When the Fed began aggressively raising rates two years ago to fight a punishing inflation surge, most economists expected the resulting jump in borrowing costs to cause a recession and drive unemployment to painfully high levels.

The Fed raised its benchmark rate 11 times from March 2022 to July 2023, taking it to the highest level since 2001. Inflation did steadily cool as it was supposed to — from a year-over-year peak of 9.1% in June 2022 to 3.5% in March.

Yet the resilient strength of the job market and the overall economy, fueled by steady consumer spending, has kept inflation persistently above the Fed’s 2% target.

The job market has been showing other signs of eventually slowing. This week, for example, the government reported that job openings fell in March to 8.5 million, the fewest in more than three years. Still, that is a large number of vacancies: Before 2021, monthly job openings had never topped 8 million, a threshold they have now exceeded every month since March 2021.

On a month-over-month basis, consumer inflation hasn’t declined since October. The 3.5% year-over-year inflation rate for March was still running well above the Fed’s 2% target.

Steven Kramer, CEO of WorkJam, an online platform that helps businesses like retailers and hospitality companies manage their hourly workers’ tasks and training, said that he is noticing that pressure to raise wages has eased. But he is seeing companies focusing more on offering flexibility in shifts for workers who are increasingly juggling multiple jobs to pay their bills in the face of still stubborn inflation. “They’re allowing workers to swap a shift or pick up a shift,” he said.

Challenges in Finding Skilled Workers

Onur Kutlubay, CEO of You Parcel, a Totowa, New Jersey-based company that provides shipping services to small e-commerce businesses, said that it’s still challenging to find skilled workers like forklift operators and supervisors, while unskilled workers are easier to find.

You Parcel has 43 workers across eight warehouse and storage facilities, most of them in New Jersey. Kutlubay said he’s had to keep increasing wages for its highly skilled employees. In 2020, skilled workers started at $16; now, hourly wages start at $25. For unskilled workers, the starting wages are now $16; in 2020, the figure was around $11.

He noted people are preferring to work as Uber drivers or work for delivery companies such as DoorDash.“The jobs give them the opportunity to get some tips from customers, ” he said. “They tend to be more attractive to people. That keeps them away from regular jobs like the ones that we have.”

RELATED TOPICS:

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

22 Miles on Foot, 10 Minutes on a Tram: An ‘Extraordinary’ Day Hike

DON'T MISS

Bakersfield to Host Sanders and AOC in ‘Fighting Oligarchy’ Event

DON'T MISS

Jaguar and Land Rover Maker Pauses Shipments to US as It Develops Post-Tariff Plans

DON'T MISS

China Hit Brakes on TikTok Deal After Trump Announced Wide-Ranging Tariffs

DON'T MISS

Shohei Ohtani Throws Second Bullpen Since Resuming Mound Ramp Up

DON'T MISS

Visalia Traffic Stop Nets $30K in Xanax, Marijuana

DON'T MISS

Fresno Joins Global Protest Against Donald Trump and Elon Musk

DON'T MISS

2 US Border Inspectors Charged With Taking Bribes to Wave in People Without Documents

DON'T MISS

The Latest: Trump’s Tariffs Unleash Trade War and Calls for Negotiations

DON'T MISS

Phone Footage Appears to Contradict Israel’s Account in Troops’ Killing of 15 Palestinian Medics

UP NEXT

Bakersfield to Host Sanders and AOC in ‘Fighting Oligarchy’ Event

UP NEXT

Jaguar and Land Rover Maker Pauses Shipments to US as It Develops Post-Tariff Plans

UP NEXT

China Hit Brakes on TikTok Deal After Trump Announced Wide-Ranging Tariffs

UP NEXT

Shohei Ohtani Throws Second Bullpen Since Resuming Mound Ramp Up

UP NEXT

Visalia Traffic Stop Nets $30K in Xanax, Marijuana

UP NEXT

Fresno Joins Global Protest Against Donald Trump and Elon Musk

UP NEXT

2 US Border Inspectors Charged With Taking Bribes to Wave in People Without Documents

UP NEXT

The Latest: Trump’s Tariffs Unleash Trade War and Calls for Negotiations

UP NEXT

Phone Footage Appears to Contradict Israel’s Account in Troops’ Killing of 15 Palestinian Medics

UP NEXT

Trump and Netanyahu to Discuss Gaza Crisis and Tariffs at Upcoming Meeting

China Hit Brakes on TikTok Deal After Trump Announced Wide-Ranging Tariffs

19 hours ago

Shohei Ohtani Throws Second Bullpen Since Resuming Mound Ramp Up

20 hours ago

Visalia Traffic Stop Nets $30K in Xanax, Marijuana

21 hours ago

Fresno Joins Global Protest Against Donald Trump and Elon Musk

21 hours ago

2 US Border Inspectors Charged With Taking Bribes to Wave in People Without Documents

22 hours ago

The Latest: Trump’s Tariffs Unleash Trade War and Calls for Negotiations

23 hours ago

Phone Footage Appears to Contradict Israel’s Account in Troops’ Killing of 15 Palestinian Medics

24 hours ago

Trump and Netanyahu to Discuss Gaza Crisis and Tariffs at Upcoming Meeting

24 hours ago

Trump Doubles Down That Tariffs Will Pay Off for Americans

1 day ago

Senate GOP Approves Trump’s Tax Breaks and Spending Cuts After Late-Night Session

1 day ago

22 Miles on Foot, 10 Minutes on a Tram: An ‘Extraordinary’ Day Hike

The steep trail near the top of the Palm Springs Aerial Tramway was covered in inches of spongy fallen needles and peppered with ankle-twist...

3 hours ago

3 hours ago

22 Miles on Foot, 10 Minutes on a Tram: An ‘Extraordinary’ Day Hike

19 hours ago

Bakersfield to Host Sanders and AOC in ‘Fighting Oligarchy’ Event

19 hours ago

Jaguar and Land Rover Maker Pauses Shipments to US as It Develops Post-Tariff Plans

19 hours ago

China Hit Brakes on TikTok Deal After Trump Announced Wide-Ranging Tariffs

20 hours ago

Shohei Ohtani Throws Second Bullpen Since Resuming Mound Ramp Up

A Visalia traffic stop on Friday, April 4, 2025, for tinted windows led to the arrest of a 22-year-old man after police found $30,000 worth of Xanax pills and a pound of marijuana in his vehicle. (Visalia PD)
21 hours ago

Visalia Traffic Stop Nets $30K in Xanax, Marijuana

21 hours ago

Fresno Joins Global Protest Against Donald Trump and Elon Musk

22 hours ago

2 US Border Inspectors Charged With Taking Bribes to Wave in People Without Documents

Help continue the work that gets you the news that matters most.

Search

Send this to a friend