In a setback for the US economy, April revealed slight weaknesses in job creation, catching analysts off guard. The Labor Department in Washington reported a significant decline in job growth compared to previous months. Unemployment saw a marginal increase, ticking up by 0.1 percentage points to 3.9 percent, contrary to analysts’ expectations of no change, as reported by Spiegel.
With only 175,000 nonfarm payroll jobs added, well below the anticipated 240,000, the US economy saw its weakest job growth since last autumn. Additionally, revisions downward by 22,000 jobs in the previous two months exacerbated the situation.
Despite this, overall unemployment in the world’s largest economy remains relatively low, indicating continued robustness in the job market. Chief economist Thomas Gitzel of VP Bank highlighted “certain weaknesses” upon closer analysis, noting that job growth was primarily concentrated in transportation and logistics, as well as education and healthcare sectors.
Wage growth also unexpectedly slowed in April, with average hourly wages increasing by 0.2 percent compared to the previous month, falling short of economists’ expectations.
The strong job market, coupled with ongoing complaints from US companies about labor shortages, poses additional inflation risks. Despite this, the Federal Reserve opted to maintain the benchmark interest rate at a high level on Wednesday, refraining from suggesting imminent interest rate cuts.
Nonetheless, the slight weakening in the US job market immediately spurred speculation about potential interest rate cuts in the USA, resulting in losses for the US dollar in currency markets, while the euro strengthened notably. Yields decreased noticeably in bond markets, while stock markets experienced gains.
