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Labor market hot streak continues as US adds 428,000 jobs

The job market is booming and wages are on the rise despite soaring inflation.

(CN) — The U.S. economy added 428,000 jobs in April while the unemployment rate stayed at a pandemic-era low of 3.6%.

Average hourly earnings are also up 5.5% compared to a year ago, according to a Labor Department report released Friday morning.

Over the last three months, American employers have added an average of 523,000 positions per month. Last month’s payroll growth beat economists’ expectations of about 400,000 jobs.

April marked the 12th straight month of gains above 400,000, though the economy is still down 1.2 million jobs compared to its pre-pandemic level in February 2020.

The latest jobs report comes just two days after the Federal Reserve raised its key interest rate by a half-percentage point – the largest hike in two decades – to combat soaring inflation, which is at a 40-year high.

“The outlook for the U.S. economy is highly uncertain, but the labor market continues to be a source of strength,” said. Nick Bunker, economic research director at Indeed Hiring Lab.

Bunker noted April’s gains weren’t as impressive as other recent months and labor force participation dropped slightly, but said the job market still has a lot of momentum.

“Even if this month’s number signals a slight slowdown in the pace of job gains, growing at this speed will continue to pull people into employment. If jobs gains were a quarter of what we saw in April, it would still be more than enough to keep the unemployment rate at its current level,” he wrote.

Last month’s growth was driven by leisure and hospitality, the industry hit hardest by the Covid-19 pandemic. It added 78,000 positions, including 44,000 at food and drinking establishments and 22,000 in accommodation. The sector is still down 1.4 million jobs since February 2020.  

Employers added 55,000 jobs in manufacturing in April, led by transportation equipment (14,000) and machinery (7,000). Transportation and warehousing payrolls rose by nearly the same, with 52,000 positions added. While the manufacturing sector is still down 56,000 jobs compared to its pre-pandemic level, the transportation and warehousing industry is up by more than 670,000.

Professional and business services, another sector that has made big gains during the pandemic, added 41,000 jobs last month. Financial activities payrolls increased by 35,000, while growth was also seen in health care (34,000), retail (29,000), wholesale (22,000) and mining (9,000). Employment levels stayed about the same in other industries like construction and information.  

In the public sector, there were 6,000 fewer positions at the federal government level while local and state governments added 21,000 and 7,000 jobs, respectively.

The unemployment rate stayed at 3.6%, the lowest level since the start of the pandemic. It was at a 50-year low of 3.5% just before Covid-19 brought the economy to a screeching halt.

Meanwhile, wages are climbing fast, with average hourly earnings rising 10 cents since March to $31.85 in April. Average pay is up 5.5% over the past 12 months.

“If you pay them, they will come, which seems to be the case in the labor market,” wrote economic consultant Joel Naroff of Naroff Economics. “Wages are soaring and that is attracting workers, as payrolls jumped again in April.  Since April 2021, over 6.6 million workers have been added, an extraordinary number.”

Naroff predicted the pace of labor market growth will slow over the next few months to a more sustainable level.

“I expect that by the end of the summer, we will be looking at job growth numbers closer to 200,000 than 400,000 per month,” he said. “Normally, that would be called really good, but given what we have been getting, some will be disappointed.” 

President Joe Biden said in a statement Friday that his administration’s policies “have produced the strongest job creation economy in modern times,” adding that fighting inflation is a top priority.

“The continued strength of our job market and the savings that families have built up over the last year means that our economy faces the challenges of Covid-19, Putin’s unprovoked invasion of Ukraine, and global inflation from a position of strength,” Biden said. “There’s more work to do. I encourage congressional Republicans to join us in our efforts to lower prices for families across the country, by making more in America, strengthening our supply chains, and cutting the energy and prescription drug costs.”

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