Unemployment rate falls to 17-year low even as job market growth slows

pulse

May 4, 2018 1:56 PM

Wage growth has been the story of the jobs report for some time, especially as the unemployment rate has continued to fall to new lows, suggesting that slack in the labor market is also shrinking.

The US unemployment rate fell below 4% in April for the first time since late-2000, according to the
Job gains were softer than economists had forecast.
Wage growth slowed, too.

The US added fewer jobs than expected in April, but the unemployment rate fell to a new 17-year low, according to the Bureau of Labor Statistics' monthly jobs report released on Friday.

Nonfarm payrolls increased by 164,000; economists had forecast a rise by 193,000 according to Bloomberg. Job gains in March were revised higher.

The unemployment rate fell to 3.9% after holding steady at 4.1% for six-months. It was the lowest level since late 2000.

Wage growth has been the story of the jobs report for some time, especially as the unemployment rate has continued to fall to new lows, suggesting that slack in the labor market is also shrinking.

Even with low unemployment, wage growth slowed last month. Average hourly earnings rose by 0.1% month-on-month and 2.6% year-on-year. Economists had forecast increases by 0.2% and 2.7% respectively.

Apart from the benefits for workers that higher pay brings, it would also lift the overall level of inflation, and keep the Federal Reserve on track to continue raising interest rates. The central bank is expected to do so in June, and possibly twice more this year after that. In its latest policy statement released Wednesday, the Fed acknowledged that inflation had "moved close to 2%," its target, in an upgrade from previous language that said the rate of price changes was consistently below its target.

Last month's report showed that job growth in the first quarter was stronger than the same period a year ago, in a sign that there were still many working-age people on the sidelines of the jobs market.

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