The U.S. economy showed the first big slowdown in job gains in more than a year last month, suggesting that early cracks in the red-hot labor market are starting to appear.
The Labor Department's Bureau of Labor Statistics said Friday that a net 175,000 new jobs were created in April, down from the upwardly revised total of 315,000 recorded in March and firmly shy of the first-quarter average of around 276,000. Economists were looking for a headline total of 243,000 in the latest number.
The economy has added 875,000 new jobs over the first four months of the year, down around 26.6% from the 1.193 million total created over the year-earlier period
Average hourly earnings slowed from March levels and were up by 0.2%, notching the smallest increase since last autumn, while the year-on-year gain eased to 3.9% from last month's 4.1%.
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Meanwhile, the labor-force-participation rate held at 62.7%. The headline unemployment rate edged higher, to 3.9% but extended its streak of sub-4% readings to a record 27 consecutive months.
“The slower jobs report will be welcome news to the Federal Reserve and signals that interest rate hikes are impacting a labor market that has been extremely resilient over the past few years," said Joe Gaffoglio, president of Mutual of America Capital Management.
"The Fed clearly stated that it is taking a cautious approach on the timing of any interest-rate cuts to ensure that inflation is well contained, and this could lead to continued pressure on the jobs market in the months to come," he added.
U.S. stocks extended earlier gains following the data release, with futures contracts tied to the S&P 500 indicating a 64-point opening bell gain and those tied to the Dow Jones Industrial Average suggesting a 505-point advance. The tech-focused Nasdaq is set to gain 290 points.
Benchmark 10-year Treasury note yields were marked 9 basis lower at 4.473% following the data release, while 2-year notes fell 13 basis points to 4.751%.
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CME Group's FedWatch, meanwhile, now suggests a 47% chance that the Fed starts cutting rates in September, up from around 42% earlier in the week.
Data from payroll-processing group ADP, published May 1, showed 192,000 new hires in April but noted that salary increases for job changers slipped to 9.3% in April from 10.1% in March. Job stayers saw year-on-year pay increases of around 5%.
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