The upward trajectory of U.S. job growth held firm in April, but the latest report from the U.S. Bureau of Labor Statistics (BLS), shows that labor market expansion has slowed slightly.
Based on Friday’s BLS data, employers added 428,000 jobs in April—a slight dip from the 431,000 jobs in March. While that marks the 12th consecutive month of job growth, the report also noted that the national unemployment remained unchanged at 3.6% compared with March’s report.
The labor force participation rate, at 62%, and the employment-population ratio, at 60%, were little changed.
According to Wall Street Journal reports, the employment gains show signs of a tight job market despite rising interest rates, elevated inflation and mounting concerns over a slowing in the market.
Key findings:
- The number of unemployed persons was essentially unchanged at 5.9 million.
- Employment in leisure and hospitality grew by 78,000 jobs, with restaurants adding 44,000 and accommodation covering the remaining spread.
- Employment in professional and business services added 41,000 jobs in April.
- Manufacturing added 55,000 jobs in April, with employment in durable goods industries—including products used in homebuilding—up by 31,000. Nondurable goods added 24,000 jobs.
- Employment in construction showed little change in job growth in April, adding 9,000 jobs.
The takeaway:
“The GDP in the first quarter of 2022 was negative and talk of an economic recession is circulating more widely,” said Lawrence Yun, chief economist at the National Association of Realtors®. “Yet in April, 428,000 net new jobs were created. The unemployment rate is low at 3.6%. Amazingly, there are two job openings for each unemployed person searching for employment. Even if the economy was to technically fall into a recession, it would be unique because of the tight job market.
“Solid job growth is one of the factors contributing to higher inflation. Consequently, the Federal Reserve is raising interest rates and many more rate hikes are on the way. With higher mortgage rates, some would-be homebuyers are simply shocked at the high mortgage payments that are now required compared to one year ago. Another factor contributing to inflation and higher interest rates is surging gasoline prices. Much less oil drilling activity now than in pre-COVID days means elevated energy prices will be with us for a while (and despite sanctions on Russia, it is still collecting sizable oil revenue from selling to countries that have not imposed sanctions, such as China, India and South Africa).”
“Job market conditions imply more potential homebuyers. But higher interest rates imply fewer homebuyers. This year at least, the negative impact of higher rates will outweigh the positive impact on jobs. Home sales are projected to decline by nearly 10% this year. Only when inflation calms down will the Fed stop raising interest rates and home sales make a turn for the better.”
“As economic and business activity continued re-opening, companies expanded their payrolls during April to the tune of 428,000 new jobs, outpacing market expectations. Employment gains were recorded across all sectors, led by leisure and hospitality, manufacturing, and transportation and warehousing. The headline unemployment rate remained unchanged at 3.6%, with the number of unemployed people at 5.9 million. As companies started moving workers back into offices, the share of remote workers declined to 7.7%, down from 10.0% during March 2022,” Yun concluded.
“Labor markets continue to remain tight this spring, with more than two job openings for every unemployed person,” said George Ratiu, senior economist at realtor.com@. “Average hourly earnings for private employees reached $31.85 in April, a 5.5% yearly gain. For most workers, what would otherwise be stellar pay increases continue to lag inflation. Workers changing jobs may be in a better position to leverage higher pay bumps.”
“A strong job market remains critical for real estate markets this year, especially as the one-two punch of high prices and mortgage rates is knocking some wind out of overheated demand. While rising costs are squeezing purchasing budgets, many buyers are still trying to take advantage of current mortgage rates, especially as they are expected to go even higher. Realtor.com’s weekly data highlight a quick-moving market. At the same time, the number of homeowners listing their properties for sale is growing compared with last year, holding the promise of a more balanced market in the months ahead.
“Another strong month of job growth has brought U.S. employment to within 0.8% of its pre-pandemic level,” said Mike Fratantoni, SVP and chief economist for the Mortgage Bankers Association. “Job growth has averaged 523,000 over the past three months, which is much faster than can be sustained over time.”
“While employment in mortgage lending may be declining due to the sharp drop in refinance volume, overall employment in the financial sector is growing, which may well provide opportunities to shift employees from mortgage to other sectors within finance.
“The labor force participation rate changed little, and with 11.5 million job openings at this pace of job growth, the unemployment rate is bound to drop further. MBA expects it will reach 3.3% as a low point later this year. Average hourly earnings were up 5.5% over the past year, a bit less than in March and well below the pace of inflation. Even with this tight job market, wage gains are not keeping up with the prices consumers are paying.”
“There was another big decline in the number of people teleworking due to the pandemic—7.7% compared to 10% in March. Clearly, big employers are beginning to bring employees back to the office. This is another piece of good news for the office market, even beyond the strong signal from continued rapid job growth.”
“Housing demand continues to benefit from one of the strongest job markets we have experienced in the last 50 years. Although mortgage rates have risen sharply, and home prices have continued to rise at a rapid pace, we expect that many potential homebuyers will continue to be in the market given their strong financial position.”
To read the full report, click here.
