Unemployment reached 3.4% in April as the number of new jobs exceeded analysts’ forecasts, according to data from the Bureau of Labor Statistics (BLS) released Friday, despite a number of economic headwinds and indications of slowing growth.
Total nonfarm employment increased by 253,000, surpassing analysts’ expectations of 180,000 new positions but falling below the 290,000 average recorded over the past six months. The recorded 3.4% unemployment rate in April marked a slight decrease from the 3.5% rate in March and is tied for the lowest joblessness level since 1969.
“Hiring has been slowing, but perhaps not as much as expected given the headwinds of persistent inflation, the steep increase in interest rates, and financial strains associated with bank failures,” Bankrate Senior Economic Analyst Greg McBride said in comments provided to The Daily Wire.
The scientific and technical services sector added 45,000 new positions, while the business services sector added 43,000 new positions and the healthcare sector added 40,000 new positions. Job losses occurred in temporary help services, which lost 23,000 positions.
The labor market has widely been considered a bright spot in an otherwise dismal economic landscape marked by record inflation and persistent supply chain bottlenecks. Low labor force participation across the economy, on the other hand, has worsened both trends as businesses raise wages to fill their payrolls and attract or retain more workers.
Robust demand for workers occurs even as pay increases more slowly than price levels, causing a decrease in purchasing power for households. Wages increased 4.4% on an annual basis as of April, surpassing expectations of 4.2% but falling below the 5.0% inflation rate recorded for March, according to data from the BLS.
The most recent unemployment report was unveiled amid continued unease in the financial sector: Silicon Valley Bank and Signature Bank, where the majority of customers maintained account balances above the Federal Deposit Insurance Corporation threshold, collapsed in March as users rushed to withdraw funds. First Republic Bank was obtained and subsequently sold by regulators on Monday, while PacWest executives announced the possibility of a sale this week and other regional banks with reduced deposit levels faced turmoil on the stock market.
Federal Reserve officials meanwhile announced a quarter-point increase in the target federal funds rate, a move which increases the cost of borrowing money such that inflationary pressures decrease, even as businesses assume less debt and decrease hiring.
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“The Federal Reserve indicated this week that it is non-committal on the question of further interest rate increases,” McBride continued. “Next week’s inflation readings, including the Consumer Price Index, will be important to watch.”
American economic growth slowed to a 1.1% annualized rate in the first quarter, marking a significant decline from previous quarters as interest rate hikes dampen economic activity, according to an advance estimate released last week by the Bureau of Economic Analysis. Federal Reserve officials concluded that the instability in the financial system warrants a recession forecast for the end of the year, followed by a predicted recovery over the subsequent two years.
Interest rate hikes contributed to the substantial loss incurred by Silicon Valley Bank as executives liquidated a long-term bond portfolio to cover withdrawals. Assets in the banking system are $2 trillion lower than their book value as a result of Federal Reserve efforts to implement the current rollback in monetary stimulus, according to a recent study from analysts at the National Bureau of Economic Research.
