A job seeker takes a flyer at a job fair at Brunswick Community College in Bolivia, North Carolina, April 11, 2024.
Allison Joyce | Bloomberg | Getty Images
Hiring is likely to continue quickly in April as investors look for gaps in the labor market that could influence the Federal Reserve.
According to the Dow Jones Consensus, nonfarm payrolls are expected to increase by 240,000 this month and the unemployment rate is also expected to remain stable at 3.8%.
If this top-line number is correct, it would actually represent a small step backwards from the average 276,000 jobs per month created so far in 2024. Furthermore, such growth could increase the Fed’s reluctance to cut interest rates and labor market inflation is humming along, with inflation still above the central bank’s 2 percent target.
“There are definitely still tailwinds,” said Amy Glaser, senior vice president of business operations at job placement service Adecco. “It’s steady-Eddie for April as resilience continues and then we look forward to some of the seasonal trends we would expect through summer.”
Glaser added that the job market was stronger in April in healthcare and leisure and hospitality. These were two of the sectors with the largest job growth this year, with healthcare adding about 240,000 jobs so far and leisure and hospitality contributing 89,000 jobs.
However, growth could expand to areas such as education, manufacturing and warehousing in the coming months, part of usual seasonal trends as educators look for alternative employment in the summer and students head out to look for jobs, she said.
“Based on what I’m seeing on the ground, I don’t expect any big surprises this month,” Glaser said. “But we’ve been surprised before.”
Expectations exceeded
In fact, the job market has been full of surprises this year, beating Wall Street estimates at a time when many economists expected hiring to slow. March’s gain of 303,000 beat forecasts and was part of a flurry of data showing that the labor economy remains strong, wages continue to rise and inflation has not changed much after a sharp decline in 2023.
That has left the Fed at an impasse, with officials reluctant to start cutting rates until they get more compelling evidence that inflation is under control.
Policymakers will examine several parts of tomorrow’s report for evidence that job growth is not helping to fuel price pressures.
If wage growth falls slightly short of expectations and wage pressures ease as more people enter the workforce, that would be an ideal scenario for the Fed, said Drew Matus, chief market strategist at MetLife Investment Management.
“The Goldilocks scenario is an increase in the unemployment rate with an increase in the participation rate,” Matus said. “This suggests there is some weakness which should translate into lower wage pressures and take some of the concerns about persistently high inflation rates off the table.”
Investors looking
The markets will also be watching wage numbers closely.
Consensus estimates put average hourly wage growth at 0.3% for the month, close to the March movement, and the annual increase at 4%, or just below the previous month’s 4.1%. But Matus said the wage numbers could be distorted by immigration patterns as well as California’s increase in the minimum wage to $16 an hour this year.
Fed Chairman Jerome Powell said Wednesday that wage pressures have eased over the past year as the labor market has developed a better balance between supply and demand.
“Inflation has fallen significantly over the past year while the labor market has remained strong, and that is very good news,” he said at his press conference after the central bank’s latest meeting. “But inflation is still too high.”
Markets were in a state of flux as uncertainty over the Fed’s interest rate stance increased, although Wall Street rallied on Thursday, a day before the Bureau of Labor Statistics report was released at 8:30 a.m. ET. mode.
“What you are seeing in the markets reflects uncertainty about the path forward. “What will be more important to the Fed, unemployment or inflation?” Matus said. “If unemployment starts to rise, will the Fed care about inflation as much as it does today? Or the other way around? And I don’t think we know, even with all the information the Fed has given us. I don’t. I think everyone knows that, and I think that’s why the market is behaving the way it is.”
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2024-05-02 20:56:45
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