|
 Nonfarm payrolls increased by 160,000 jobs last month as
construction employment barely rose and the retail sector shed jobs
for the first time since December 2014, the Labor Department said on
Friday.
April's job gains were the smallest since September and below the
first-quarter average job growth of 200,000. Adding to the report's
soft tone, employers added 19,000 fewer jobs in February and March
than previously reported.
The slowdown in hiring came against the backdrop of weak economic
growth, subdued productivity and corporate profits. It prompted some
financial institutions, including Bank of America Merrill Lynch and
Barclays, to lower their interest rate hike expectations for this
year to one from two before the report.
"We now only expect one rate hike in 2016, in September, as we
believe it will take longer for policymakers to accumulate
sufficient evidence that economic and labor market activity is
rebounding after a soft start to the year," said Michael Gapen,
chief economist at Barclays in New York.
The Fed raised its benchmark overnight interest rate in December for
the first time in nearly a decade. Fed officials have forecast two
more rate hikes for this year. Economists had expected the first of
the two increases in June.
A Reuters survey of Wall Street banks that directly do business with
the Fed showed nine out of 17 expected the U.S. central bank to
tighten monetary policy twice this year. This compared to 12 of 16
banks a month ago.
Market-based measures of Fed policy expectations have virtually
priced out an interest rate increase at the Fed's June 14-15
meeting, according to CME Group's FedWatch. They see a 42 percent
probability of a rate increase in September and a 61 percent chance
at the December meeting.
New York Fed President William Dudley, however, told the New York
Times on Friday that two rate hikes remained a "reasonable
expectation."
The dollar initially fell against a basket of currencies on the
employment report, but retraced losses after Dudley's comments.
Prices for U.S. government debt fell, while stocks on Wall Street
reversed earlier losses to end higher.
Though the unemployment rate held at 5.0 percent last month that was
because people dropped out of the labor force. The stepdown in job
gains could temper expectations of a strong rebound in economic
activity in the second quarter after growth nearly stalled in the
first three months of the year.
Economists had forecast payrolls rising 202,000 last month.
SILVER LININGS
There were some silver linings in the report, with both average
hourly earnings and the average work week rising.
Average hourly earnings increased eight cents or 0.3 percent. That
took the year-on-year increase to 2.5 percent from 2.3 percent in
March, still below the 3.0 percent advance that economists say is
needed for inflation to rise to the Fed's 2.0 percent target.
The average work week increased to 34.5 hours from 34.4 hours in
March. The 0.4 percent increase in aggregate hours and higher
earnings left workers with a 0.7 percent increase in their take-home
wages, which should support consumer spending.
Economists said the moderation in job creation was not surprising,
citing weak business investment and a shortage of skilled workers in
areas like construction.
[to top of second column] |
"Without business growth and development, there is little support
for robust job creation. This morning's report suggests we may
already be seeing early signs of at least a modest slowdown in the
pace of employment," said Lindsey Piegza, chief economist at Stifel
Fixed Income in Chicago.
Other economists saw the slowdown in employment last month as
payback for mild winter weather, which had seen strong hiring in
retail and construction sectors in the first quarter.
Details of the smaller household survey from which the unemployment
rate is derived were mostly weak.
The labor force participation rate, or the share of working-age
Americans who are employed or at least looking for a job, fell 0.2
percentage point to 62.8 percent. It had increased 0.6 percentage
point since dipping to 62.4 percent in September.
The labor force fell by 362,000 as people dropped out in April. The
labor force had increased 2.4 million in the prior six months.
The employment-to-population ratio fell to 59.7 percent in April
from a seven-year high of 59.9 percent in March. But a broad measure
of unemployment that includes people who want to work but have given
up searching and those working part-time because they cannot find
full-time employment slipped one-tenth of a percentage point to 9.7
percent last month. The larger establishment survey showed the vast
private services sector dominated employment gains in April, adding
174,000 jobs. Retail payrolls fell 3,100 last month after hefty
gains in the first quarter, which came despite sluggish sales.
Information sector employment was unchanged last month and a Labor
Department official said there was no sign that a strike by about
40,000 Verizon workers had impacted the data.
Manufacturing added 4,000 jobs after shedding 29,000 in March, the
biggest loss for the sector since December 2009.
There were further job losses in mining as the energy sector adjusts
to weak profits from a recent prolonged plunge in oil prices. Mining
payrolls fell 8,000 last month. Mining employment has decreased by
191,000 jobs since peaking in September 2014, with 75 percent of the
losses in support activities.
Gains in construction employment slowed sharply, with the sector
adding 1,000 jobs in April, after home building showed some signs of
fatigue last month. Government payrolls fell 11,000 last month.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
