Hiring in the United States picked up pace in April and unemployment returned to the lowest level in decades, government data showed Friday, defying expectations of a slowdown despite higher interest rates.
The latest figures show that the labor market remains strong despite banking sector upheaval, higher borrowing costs and uncertainty surrounding a potential government default.
The world’s biggest economy added 253,000 jobs last month, up from a revised 165,000 figure in March, said the Labor Department.
The jobless rate ticked back down to 3.4 percent, a level last seen in January and before then, the late 1960s.
“Employment continued to trend up in professional and business services, health care, leisure and hospitality, and social assistance,” the Labor Department said in a statement.
Average hourly earnings rose 0.5 percent to $33.36, data showed, and compared with a year ago, the figure is up 4.4 percent.
– More cooling needed –
To rein in stubborn inflation, the Federal Reserve has lifted the benchmark lending rate ten consecutive times since early 2022 –- with higher lending costs making it pricier to borrow funds for big-ticket purchases or business expansion.
Analysts originally expected hiring to ease to the slowest pace in over two years, closely eyeing the job market for signs that the economy is cooling enough for the central bank to pause its cycle of rate increases.
“The data show that the labor market remains tight, and the economy is still creating jobs at a rapid pace. And wage pressures are not easing,” said Rubeela Farooqi, chief US economist at High Frequency Economics.
“There is a risk that the Fed will raise rates further based on these data and sticky inflation readings,” she said.
But the expectation — following the series of rate hikes already announced — is that the Fed “will hold rates steady at the current level for some time” while waiting for the full effects of policy to ripple through the economy, she said.
On Wednesday, the Fed lifted interest rates another quarter-point to the highest range in around 16 years, while noting that tighter credit conditions for households and businesses are likely to weigh on the economy.
Although it hinted at the possibility of halting further increases as the economy cooled and first quarter GDP growth slowed to an annual rate of 1.1 percent, the latest figures could give policymakers some pause.
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