Achi news desk-
A slowdown in employment growth in the US revives talk of lowering interest rates
U.S. job growth cooled last month and the unemployment rate hovered higher, a sign that some of the heat may be coming out of the world’s largest economy.
Employers added 175,000 jobs in April, while the unemployment rate rose to 3.9% from 3.8% in March, the Labor Department said.
It marked the smallest gains in employment since October and the first time in months that growth was weaker than analysts had expected.
The US labor market is being closely watched for signs of a slowdown, as borrowing costs are at a two-decade high.
Analysts said the report could strengthen the Federal Reserve’s case for lowering interest rates later this year.
“Finally there is evidence of some weakness in the US labor market. Interest rate cuts will move back onto the agenda and as a result there is no doubt that the markets will take this as good news,” said Neil Birrell, Chief Investment Officer at Premier Miton Investors.
“While it’s not advisable to do too many individual data prints, this could be the start of a positive trend for the Fed,” he added.
The Federal Reserve has sharply raised interest rates starting in 2022, hoping to cool the economy and ease the pressures that have driven up prices at their fastest rate in decades.
Analysts had expected the U.S. central bank to cut interest rates this year as inflation, which measures the rate at which prices rise, cooled.
But at 3.5% in March, it remains above the bank’s 2% target, raising doubts about the timing of such moves.
An unexpectedly strong labor market, which has bolstered consumer spending — and the broader economy — has added to those questions.
At the same time, it raised hopes that the U.S. could avoid a painful economic downturn of the kind that has historically often accompanied a spike in borrowing costs.
Stocks in the US opened higher after the latest jobs data from the Ministry of Labor.
Satyam Panday, chief U.S. economist at credit rating agency S&P Global Ratings, said signs of a slowdown in hiring are expected and should help cool inflation, without being so severe as to raise fears of a recession.
“I would call it a decent jobs report but not too hot, so the Federal Reserve really likes it,” he said, adding that he expects the Fed to be ready to cut interest rates by “maybe by sometime in the fall or maybe December.”
The rate of job growth in April remained relatively durable, although slower than previous months.
Employers added 315,000 jobs in March and 236,000 in February. That was about 22,000 less than previously estimated, the Labor Department said.
In April, most sectors added workers, with healthcare companies leading the gains, according to the report.
Average hourly earnings rose 3.9 percent in the 12 months to April, a slower pace than the previous month, the Labor Department said.
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