U.S. Adds a Surprisingly Strong Number of Jobs in April
Job growth in the U.S. unexpectedly accelerated in April despite recent stress in the banking system and historic interest rate hikes. Despite rising interest rates, the economy is not cooling nearly as fast as the Fed would desire. The Fed has imposed 10 rate hikes since March 2022 which has taken the federal funds rate to a 16-year high of more than 5%. Despite efforts by the Fed to curb inflation, the pace of hiring is still putting upward pressure on wages and inflation. And yet, pay increases aren’t keeping up with inflation. While the outlook for labor market is uncertain, job growth remains robust, and unemployment is at historically low levels.
Employers’ steady demand for labor added roughly 253,000 employees to payrolls in April 2023, according to the Bureau of Labor Statistics (BLS). That was the strongest month-over-month gain since January 2023. The nation’s recent job additions were well ahead of economist’s projections (180,000 jobs) and well above March’s gain of 165,000 jobs.
While recent job gains are below the monthly average of around 399,000 jobs added in 2022, employers are continuing to hire more workers than they did prior to the pandemic. From 2015 to 2019, the U.S. economy added an average of roughly 190,000 jobs each month.
On an annual basis, the nation gained roughly 4 million jobs as of April 2023. Although down from the annual gains recorded throughout much of 2021 and 2022, that was well above the average of around 2.4 million jobs added annually from 2015 to 2019.
Downward revisions to February 2023 data showed 78,000 fewer jobs were added than previously reported, down to 248,000 jobs. The March 2023 job growth number was also revised down, falling by 71,000 jobs to a total of 165,000 jobs. With these revisions, employment gains in February and March combined were 149,000 lower than previously reported.
The U.S. economy has recovered all the net jobs lost during the COVID-19 pandemic. As of April, the nation had over 3.3 million more jobs (+2.2%) compared to the pre-pandemic employment level from February 2020.
Jobs by Industry
Job growth in April was seen across all major industry sectors, but most notably in the Education and Health Services industry (+77,000 jobs). Solid gains were also recorded in Professional and Business Services (+43,000 jobs), Leisure and Hospitality Services (+31,000 jobs), Financial Activities (+23,000 jobs) and Government (+23,000 jobs).
Most major industries have recovered all the jobs lost during the COVID-19 pandemic downturn. Professional and Business Services has seen the best recovery, with today’s job count coming in more than 1.5 million positions ahead of February 2020 numbers. Trade, Transportation and Utilities is also well ahead of pre-pandemic norms, with employment up more than 1.1 million jobs.
Alternatively, some of the harder-hit sectors remain below pre-pandemic job counts. Despite recent gains, employment in the Leisure and Hospitality Services sector is still well below pre-pandemic employment counts, by roughly 402,000 workers. The Government sector is about 301,000 jobs behind February 2020 levels. Other industry sectors yet to recover all jobs lost during the COVID-19 downturn include Other Services (-96,000 jobs) and Mining and Logging (-44,000 jobs).
The unemployment rate (U3 or headline unemployment rate which is seasonally adjusted) in April clocked in at 3.4%, down slightly from the 3.5% rate in March and matching the 54-year low of 3.4% recorded in January. Over the past year, the unemployment rate has been in a narrow range of 3.4% to 3.7%. At the onset of the pandemic, the unemployment rate climbed to 14.7% in April 2020. Prior to the pandemic, the unemployment rate clocked in at 3.5% to 5.7% from 2015 to 2019, averaging 4.4% during that period.
The total number of unemployed in the U.S. edged up to roughly 5.7 million in April, with that measure showing little movement since early 2022.
The unemployment rate for adult men decreased 10 basis points (bps) from March to April, falling to 3.3%. The unemployment rate for adult women was unchanged, at 3.1%. Meanwhile, the unemployment rate for teenagers dropped 60 bps from 9.8% in March to 9.2% in April.
The unadjusted unemployment rate in the U.S. fell to 3.1% in April, down 50 bps month-over-month. Across 12 major industries, unadjusted unemployment rates declined in 10 from March to April. Decreases were recorded in Mining (down 470 bps to 1.8%), Information (down 170 bps to 1.4%), Construction (down 150 bps to 4.1%), Other Services (down 120 bps to 2.1%), Wholesale and Retail Trade (down 110 bps to 3.3%), Transportation and Utilities (down 100 bps to 3.6%), Education and Health Services (down 50 bps to 1.9%), Government (down 20 bps to 1.5%), Professional and Business Services (down 20 bps to 3.7%) and Manufacturing (down 10 bps to 2.8%). The unemployment rate in Leisure and Hospitality Services was unchanged from March to April, at 5%. Conversely, the only increase in unemployment was recorded in the Financial Activities industry, up 30 bps to 2.1%.
The highest industry unemployment rates (not seasonally adjusted) in April were in Leisure and Hospitality Services (5%), Construction (4.1%), Professional and Business Services (3.7%) and Transportation and Utilities (3.6%). The lowest unemployment rates were in the Information (1.4%), Government (1.5%), Mining (1.8%) and Education and Health Services (1.9%) sectors.
Average Hourly Earnings
Average hourly earnings among employees on private nonfarm payrolls rose $0.16 (+0.5%) from March to April. That monthly increase took average hourly earnings to $33.36 in April. On an annual basis, average hourly earnings were up $1.42, a 4.4% increase year-over-year. However, wages were outstripped by inflation, as the Consumer Price Index (CPI) rose 5% in the year-ending March. The Fed’s target for inflation is currently at 2%.
Wage growth over the past year varied by industry. The largest increases in earnings from April 2022 to April 2023 were recorded among workers in Mining and Logging (6.6%), Leisure and Hospitality Services (5.7%), Construction (5.4%), Trade, Transportation and Utilities (5.1%). The smallest increases were among employees in Financial Activities (3.7%) and Manufacturing (3.9%).