Employers in April added the fewest number of workers in seven months and the USA jobless rate held steady as subdued economic growth prompted a more moderate rate of hiring.
Advertisement
The overall Canadian labour market was stuck in neutral last month as a solid employment gain in the services sector was wiped out by job losses in the goods-producing industry, especially manufacturing. Revisions to the February and March reports also revealed that employers created 19,000 fewer net jobs than previously believed. The odds of a Fed rate hike this year were dwindling by the day ahead of the jobs report anyway.
The unemployment rate remained at a low of 5 per cent, roughly where it has been since the fall.
Stocks fell at the open Friday after a disappointing jobs report came in lighter-than-expected and raised concerns about the strength of the US economy. It prompted some financial institutions, including Bank of America Merrill Lynch and Barclays, to lower their interest rate hike expectations for this year to one from two before the report. In the past year, average hourly earnings have risen by 2.5 percent-a positive sign for economists looking for wages to catch up in 2016.
This month’s jobs numbers seem to partly resolve the mystery of surging hiring and weak economic growth-contrasting signals of the economy’s strength.
However, digging deeper shows a stronger gain in base pay, which is more important for consumer spending and is a subtle hint that the tightening in the job market is translating into increases in workers’ base pay.
“Today’s jobs report suggests the labor market slowed, but did not falter, in April”. This month’s dip might be mostly driven by retirements, but the apparent pause in the return to the labor force of those who had early dropped out is disappointing. The current total is 13,900 jobs (1%) more than in April previous year. In April, the number of people not in the labor force soared by a whopping 562,000.
Gains in construction employment slowed sharply, with the sector adding 1,000 jobs in April, after home building showed some signs of fatigue last month.
The pace of job creation recently peaked in 2014 – the best year for employment growth since 1999.
Last month, job growth fell in retail, construction and government, and remained weak in manufacturing.
And wage gains have improved. The unemployment rate, which is tied to a separate survey of households, stayed at 5 per cent.
As much as the labor market was showing sign of improvement, it’s not like output and price growth are making a pound-the-table-case for higher rates. The labor force had increased 2.4 million in the prior six months.
Advertisement
The average workweek for private-sector employees also increased, rising 0.1 hour to 34.5 hours. Employment in mining and logging, a sector that includes the coal and oil and gas industry, fell by 8,000 in April, extending a long streak of declines. Mining employment dropped by 7,000 jobs in April.
