US job growth exceeds estimates, and unemployment has reached a half-century low.

WASHINGTON (Reuters) – The U.S. Employers in the United States increased hiring while rising compensation for employees in April, pointing to continuing labour market resilience that might see the Federal Reserve hold interest rates higher for some time.

Nonfarm payrolls grew by 253,000 last month, according to the Labour Department’s carefully monitored employment data released on Friday. The number of jobs created in March was lowered down to 165,000 from 236,000 earlier reported.

Reuters surveyed economists, who predicted a 180,000 increase in payrolls. Payrolls are substantially over the 70,000-100,000 monthly increase required to keep up with working-age population growth.

The unemployment rate decreased to 3.4% in April, down from 3.5% in March.
After increasing by 0.3% in March, average hourly earnings increased by 0.5% in April. Wages grew 4.4% year on year in April, after a 4.3% rise in March.

Other indicators of momentum include the Employment Cost Index and the Atlanta Fed’s pay tracker. Wage growth is still too rapid to meet the Federal Reserve’s 2% inflation objective.

On Wednesday, the Fed hiked its benchmark overnight interest rate by 25 basis points to the 5.00%-5.25% range, signalling that it may stop the US central bank’s quickest monetary policy tightening campaign since the 1980s, albeit it maintained a hawkish tone. Since March 2022, the Fed has raised its policy rate by 500 basis points.

However, other economists argue that the labour market is exaggerating the economy’s health, citing the disparity between consumer spending and employment increases, as well as a continuous drop in worker productivity.

In February and March, consumer spending slowed. Productivity has fallen year on year for five consecutive quarters, the longest such streak since the government began monitoring the indicator in 1948.

Economists also remarked that job growth was becoming increasingly concentrated in the leisure and hospitality industries, as well as state and municipal governments, sectors where employment remained lower than pre-pandemic levels.

With the odds of a recession increasing due to higher borrowing prices and tighter credit conditions in the midst of financial market crisis, the job environment might shift swiftly.

For the time being, the prevailing belief is that the economy will continue to add employment into the fourth quarter.