Solid job growth continues in recovering US economy

US President Joe Biden arrives at Cincinnati/Northern Kentucky International Airport in Hebron, Kentucky. President Biden travels to Hamilton, Ohio, to speak about the economy and to meet with manufacturing leaders.

From restaurants to factories to warehouses, American businesses hired staff with vigour in April as the US economy recovers from the damage done by Covid-19 while grappling with inflation that has hit the highest rate in decades. Employers in the world’s largest economy added 428,000 jobs last month, the Labour Department said yesterday, keeping the unemployment rate at 3.6%, just above where it was before the spread of Covid-19 caused mass layoffs two years ago. The data pointed to continued strong job growth and contained hints that some inflationary pressures may be easing - welcome news for an economy where consumer prices have been climbing at levels not seen since the 1980s. President Joe Biden welcomed the data as a sign that his policies had revived the economy from the grievous damage wrought by the pandemic. “Our plans and policies have produced the strongest job creation economy in modern times,” Biden said in a statement. The data was released two days after the Federal Reserve hiked the key lending rate by a half-percentage point to crush the wave of price increases, and signalled they plan further hike in the months to come. Workers’ wages are a component of rising inflation, and the jobs report showed average hourly earnings rising only 0.3% compared to March, a slower pace that in recent months and potential signal the price pressures are abating. “Nothing in this will or should change what the Fed does in June, but is another sign that the underlying inflation trend may be lower than I thought and coming down,” Harvard University professor Jason Furman tweeted. After spiking to 14.7% in April 2020 following business closures across the country as the pandemic began, unemployment has declined steadily and is now just a hair above its 3.5% rate before the pandemic began. The number of unemployed people was at 5.9mn last month, the Labour Department said, also not far from where it was in February 2020, while a range of businesses took on new hires. These included the leisure and hospitality sector, which includes the hotels and restaurants that bore the brunt of the pandemic restrictions. The sector added 78,000 jobs last month, while manufacturers hired 55,000, transportation and warehousing took on 52,000 and employment at professional and business services firms rose 41,000. But the labour force participation rate indicating the share of the population employed or searching for work declined slightly from March to 62.2%, bringing it back to its level at the start of the year. Other data show there are nearly two job openings for every unemployed person in the labour force. “Looking ahead, we expect more workers to come off the sidelines in search of work and labour demand to cool as businesses feel the pinch from high inflation and tighter financial conditions,” Kathy Bostjancic of Oxford Economics said. However, she predicted “it will take time for labour demand and supply to realign,” and wage growth could remain higher than the pre-pandemic rate of about three percent for months to come. The data indicated some improvement in racial disparities in the labour market, with the Hispanic unemployment rate falling slightly to 4.1%. Joblessness among African-American workers declined to 5.9% as more women were hired, though unemployment rose for Black men. Asian unemployment ticked up to 3.1%, while it was flat for white workers at 3.2%. Despite the slowing in monthly wage growth, Sophia Koropeckyj of Moody’s Analytics noted the 5.5% annual salary increase in April was not keeping pace with inflation, which has seen consumer prices climb at an 8.5% annual rate. “The one month of softer wage growth is really not sufficient to allay concern about wage pressures. Hence, the Fed’s success in slowing the economy and tempering wage and price pressures is of paramount importance,” she wrote in an analysis.