The U.S. economy added 428,000 jobs in April, exceeding expectations, a report by the Labor Department on Friday showed.
Economists had estimated a 400,000 gain in the nonfarm payrolls, according to data from FactSet. The growth in April was on par with the revised 428,000 additional jobs reported for March.
The unemployment rate was unchanged at 3.6%.
"Job growth was widespread, led by gains in leisure and hospitality, in manufacturing, and in transportation and warehousing," the report stated.
The monthly employment situation summary is closely watched by investment analysts and economists when assessing whether a strong labor market might translate into faster inflation.
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The current labor market is considered by many economists to be at full employment, as there were 11.3 million job openings in February but only 5.4 million people were looking for a job that month.
According to Friday's Labor Department report, average hourly earnings rose 0.3%, up 5.5% year-over-year.
The added payroll number as well as the unemployment rate put increased pressure on the Federal Reserve as it plans its next steps to bring down inflation, currently running at 8.5%, the highest in four decades.
A tighter job market tends to drive wages up, since workers have more options, and employers have to pay up to recruit or retain them; then the employers will often try to pass along the elevated personnel costs to consumers in the form of higher prices for goods and services.
Rising labor costs
During the first quarter of this year, employers paid workers 1.4% more on average than during the prior three-month period, according to a report released last week. It was the biggest jump in two decades.
In a press conference on Wednesday, Federal Reserve Chair Jerome Powell described the current labor market as “very, very tight” and that it was at an “unhealthy level.”
“You can see that the labor market is out of balance,” he said. “There aren’t enough people to fill these job openings and companies can’t hire, and wages are moving up at levels that would not over time be consistent with 2% inflation.”
In order to bring the labor market back to normal levels, where demand and supply is in balance, there needs to be price stability, Powell said.
But demand and supply imbalances don’t look to ease anytime soon, according to an economists’ report from BNP Paribas.
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“Even if various price metrics top out over the next few months, labor conditions will broadly inform policymakers’ inflation assessment,” economists at BNP Paribas wrote. “So in addition to price metrics, labor gauges … will factor prominently into the Fed’s interpretation of incoming pricing data – and we do not see much relief (if any) on this front over the next few months.”