US job growth rebound makes interest rate hike more likelyComments
There was a sharp rebound in job growth in the United States in April.
Employers hired 211,000 new workers – a big jump from March’s lacklustre 79,000, though that was partly due to extreme winter weather in the Northeast of the US.
The gains were broad-based with the biggest increase in the leisure and hospitality areas (55,000) followed by professional and business services (39,000). Healthcare and social assistance employment increased by 36,800 jobs and government payrolls jumped 17,000 last month.
The unemployment rate dropped from 4.5 percent to 4.4 percent of the workforce – the lowest in almost 10 years.
That decline reflected both an increase in hiring and people stopping looking for work.
The US labour market is expected to hit a level consistent with full employment this year.
That could mean a slowdown in payroll gains. There is already anecdotal evidence that companies are struggling to find qualified workers. That could also push up wages.
The signs of a tightening labour market could seal the case for the US central bank, the Federal Reserve, to raise the cost of borrowing soon perhaps as early as next month.
On Wednesday the Fed kept its main interest rate unchanged and said it expected labour market conditions would “strengthen somewhat further”.
“With continued solid job growth, the US economic expansion will continue throughout 2017. The Fed will raise the federal funds rate again in mid-June as the economy is approaching full employment,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh.