The U.S. economy added a surprisingly strong number of new jobs last month, the Labor Department data indicated Friday, but revisions of gains recorded over the last two months partially offset a faster-than-expected advanced in average hourly wages.
The Bureau for Labor Statistics said 253,000 new jobs were created last month, well ahead of the Wall Street consensus forecast of a 180,000 gain. Private payrolls were up 230,000, the BLS said, as the unemployment rate eased to 3.4%.
The BLS also revised its March jobs-addition estimate lower, to 165,000 from its original estimate of a 236,000 net gain, while lowering its February estimate to 248,000 from its prior estimate of 326,000.
The BLS noted that hourly wages were up 0.5% on the month - topping the 0.3% gains recorded over March and the Wall Street consensus forecast. On a year-on-year basis, wages were up 4.4%, compared with the 4.2% pace recorded in March, the BLS said, and the Street forecast of 4.2%.
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"Today’s jobs report point to a jobs market that still appears healthy on the surface, but fails to illustrate the shifts beneath the surface," said Jason Pride, chief of investment strategy & research at Glenmede. "Still, with aggregate wage gains again higher than expected, it does not point to immediate resolution of inflation concerns."
"Such data may weigh on the Fed’s potential rate hike pause at its next meeting," he added. "With that said, this is just one data point, and a heavily revised one at that, that will aggregate into a larger picture by the time the next Fed meeting rolls around."
U.S. stocks extended gains following the data release, with the Dow Jones Industrial Average gaining 567 points in late afternoon trading and the S&P 500 rising 79 points. The tech-focused Nasdaq was marked 282 points higher.
Benchmark 10-year Treasury note yields gained 3 basis points from yesterday's levels to 3.439% while 2-year notes 10 another basis points to 3.918%. The U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.03% lower at 101.381.
The CME Group's FedWatch is now indicating a 96.1% chance that the Fed will hold its benchmark rate steady at between 5% and 5.25% when the central bank next month in Washington, with bets on a September rate cut still holding at around 75%.
Commerce Department data published last week showed the closely-tracked core PCE price index for the first quarter, one of the Federal Reserve's favored inflation metrics, accelerated at a 4.9% pace, topping the 4.4% rate from late last year.
A separate report from the Labor Department showed its closely-tracked employment cost index rose 1.2% over the first quarter, just ahead of the Street's 1.1% forecast. Private-employer wages were up 5.1% in March, the data indicated.
"The labor market remains extraordinarily tight," Fed Chairman Jerome Powell told reporters in Washington earlier this week, but noted there were "some signs that supply and demand in the labor market are coming back into better balance."
"But overall, labor demand still substantially exceeds the supply of available workers," he added. "You still got 1.6 job openings, even with the lower job openings number for every unemployed person. Right now, we need to be focusing on bringing inflation down. Fortunately, we've been able to do that so far without unemployment going up."
