With higher
April payrolls and smaller wage gains, labour market unlikely to spur inflation
WASHINGTON .US hiring
rebounded last month and the unemployment rate dropped below 4 per cent for the
first time since 2000, while wage gains cooled by more than forecast, a sign
that the labour market still isn’t tight enough to spur inflation.
Payrolls rose 164,000
after un upwardly revised 135,000 advance, Labour Departement figures showed
yesterday.
Average hourly earnings
rose 0.1 per cent from March and 2.0 per cent from a year earlier, both less than
projected. The jobless rate, derive from a separate survey of household, fell to 3.9 per cent, the lowest since
December 2000, after six months at 4.1 per cent.
Treasury yields dipped
and the US dollar fluctuated following the report.
Despite the
softer-than-expected wage reading, an unemployment rate drifting further below Federal Reserve
officials’ estimates of levels sustainable in the long run may in their view
add to upward pressure on wages and inflation. That would keep the central
bank on track to raise interest rates next month for the second time this year and once or twice
more after that.
The result may also
reinforce forecasts for a rebound in economic growth this quarter after a
slowdown in the first three months of the year, with the labour market
supporting gains in consumer spending that may be further fulled by tax cuts.
Companies in industries from services to manufacturing are hungry for
workers,indicating hiring is likely to stay solid.
“Overall, it’s a good
report,” said Mr Michael Feroli, chief US economist at JPMorgan Chase.
“Slack is getting
absorband” but “ the process of that translating into faster wages has
been slow. Wages are clearly the one disappointing part of the report”.
For the fed, though, “this
is probably a wash”, he said.
April’s payroll gain
reflected a 168,000 increase in private employment, compared with the median
estimate for 1990,000. Goods-producing job picked up to 49,000 increase, with
construction rebounding to a 17,000 gain after a decline that may have been
impacted by weather in March. Manufacturing added 24,000, the seventh straight month
at 20,000 or more.
Hiring at service
providers was little changed at 199,000,
with the biggest gains in professional and business services at 54,000, and
education and health services at 31,000.
The decline in the jobless rate resulted from a drop in the number of unemployed people, while the
number of employed Americans was little changed. The pushed down the
participation, or share of working-age people, to 62.6 per cent from 62.9 per
cent in the prior month. The employment-populatoin ratio, another broad
measure of labour-market health,fell to 60.3 per cent from 60.4 per cent.
The wage figures showed
pay gains are having a tough time breaking out of their recent pace of modest
incrases. The monthly gain in average hourly earnings followed a downwardly revised 0.2 per cent a in crease in March, and March's annual increase was also revised
lower to 2.6 per cent. BLOOMBERG
Advertisement
PARALAK ADS 1