As jobs increased in April, the unemployment rate dropped below 4% for the first time since 2000, according to the latest Employment Situation Summary report from the U.S. Bureau of Labor Statistics.
The unemployment rate decreased to 3.9% in April, down the previous rate which had remained unchanged for six months at 4.1%, according to the report. The number of unemployed persons edged down from 6.6 million to 6.3 million in April.
“With the unemployment rate hitting an 18-year low of only 3.9% in April, the Fed is still going to push ahead and raise interest rates again in June, even though average hourly earnings growth remained at a muted 2.6% year-over-year,” Capital Economics Senior Economist Michael Pearce said.
This decrease was driven by the drop in unemployment rate for adult women, which decreased to 3.5% in April. The jobless rates for all other groups including men at 3.7%, teenagers at 12.9%, whites at 3.6%, blacks at 6.6%, Asians at 2.8% and Hispanics at 4.8%, all showed little or no change over the month.
“While the unemployment rate dropped to its lowest levels in 17 years, April’s jobs growth failed to meet expectations,” said Yun Cohen, National Association of Federally Insured Credit Unions research assistant.
“Wage growth, too, was moderate and labor force participation also slipped during the month,” Cohen said. “The lack of wage growth could be seen as an indicator that inflationary pressures are not building too quickly.”
Total non-farm payroll employment increased by 164,000 in April, compared to the average monthly gain of 191,000 over the past 12 months. This an increase from March, when jobs increased by an upwardly revised 135,000.
One expert explained that the last couple months of weaker job gains is to be expected as the market cannot continue to average nearly 200,000 new jobs per month.
“Today’s weaker than expected data comes on the heels of a weaker report in March as well, and it was a long time coming, as the economy simply can’t sustain over 200,000 jobs each month when less workers are looking for jobs,” said Steve Rick, CUNA Mutual Group chief economist. “There’s just not a lot of slack left in the market.”
The majority of job gains in April can be attributed to an increase in jobs in professional and business services, manufacturing, health care and mining.
Here are some of the areas which showed major changes in March:
· Employment in professional and business services increased 54,000
· Employment in manufacturing increased 24,000
· Employment in health care increased by 24,000
· Employment in mining increased 8,000
Employment changed little over the month in other major industries, including construction, wholesale trade, retail trade, transportation and warehousing, information, financial activities, leisure and hospitality and government.
The average workweek for all employees on private non-farm payrolls remained unchanged at 34.5 hours in April. Average hourly earnings increased by $0.04 to $26.84.
The National Association of Realtors explained the increasing jobs show just how much pent-up housing demand is in the housing market.
“Today there are more than 16 million more jobs compared to back in 2002, yet home sales are running essentially even, meaning there is plenty of pent-up housing demand,” NAR Chief Economist Lawrence Yun said. “What is needed is new supply and new home construction.”
“The number of construction workers is rising, but is insufficient, even though the average wage rate of a non-supervisory construction worker, at $27, is much higher than the average wage of all workers, at $22 per hour,” Yun said.