The US economy pumped out a solid 223,000 net new jobs in April, rebounding modestly from a dismal March, the Labor Department reported Friday.
The jobless rate fell to a seven-year low of 5.4 percent, down 0.1 percentage point from the previous month.
The gains were roughly in line with expectations after March’s sharp fall in job creation. Analysts said the economy still shows muscle following the first-quarter stall.
But, pointing to weak details behind the headline numbers, they also said another strong month or two is needed to prove the winter slowdown was “transitory”, as the Federal Reserve said at the end of April.
The report was “much better than in March, but still not by enough to fully offset March’s weakness,” said Jim O’Sullivan of High Frequency Economics.
Details in the report showed only slight signs of tightening in the labor market, which is key to both confidence in the economy’s strength and the Fed’s plan to begin hiking interest rates this year.
The number of unemployed Americans was virtually unchanged from March at 8.5 million, as was the labor force participation rate, at 62.8 percent, compared with above 66 percent before the 2008-2009 recession.
Also barely changed was the number of people forced to accept part-time jobs, 6.6 million, and average wages, up a bare 0.1 percent in the month and just 2.2 percent from a year ago.
“More people are working, but they’re not getting fatter paychecks,” said Sal Guatieri of BMO Capital Markets.
– End of winter stall? –
Further clouding the picture were the Labor Department’s revisions to the job creation numbers for February and March, losing a combined 39,000 jobs from what was previously reported. The March number was just 85,000, after a year of job growth averaging 287,000 a month across the country.
March’s plunge came at the end of a quarter when the economy stalled due to several factors: extremely harsh winter weather that locked down economic activity for weeks in some areas; the West Coast ports slowdown that severely hampered trade for more than three months; the strong dollar’s hit on exports; and general global economic weakness.
The initial estimate for the January-March economic growth rate was just 0.2 percent and some analysts believe that will be revised to a negative number.
But with the winter past and the ports back to full operation, the second quarter should be better. After its last policy meeting in late April, the Fed said it believed the first-quarter slump reflected “in part” such transitory factors.
Yet the April employment data suggested a tepid recovery from the winter so far.
Job gains last month were strongest in construction, health care, and professional and business services, while losses came in mining, particularly the oil and gas industry, where companies are cutting back sharply due to the oil price crash.
Analysts said the April rebound, if sustained over the next months, should confirm the Fed’s plan to pull the benchmark federal funds rate up from zero, where it has sat since the end of 2008 to help the economy recover from the Great Recession.
“This report will keep the Fed on track for tightening this year but it will not help the case for moving earlier than September,” said O’Sullivan.