Pace of US job creation expected to have slowed in April

The pace of job creation in the US economy is expected to have slowed slightly last month even as the unemployment rate dips to pre-pandemic levels, in a new test of the tightness of the labour market.

According to economists’ forecasts assembled by Reuters ahead of data due to be released on Friday, US non-farm payrolls grew 391,000 in April, compared to increases of 431,000 in March and 750,000 in February.

Meanwhile, the jobless rate is expected to have edged down to 3.5 per cent from 3.6 per cent last month, matching the level it stood at in February 2020 before the pandemic began spreading across the US for the first time.

While job creation has been exceedingly strong across the US economy over the past year, and the unemployment rate has fallen much more rapidly than expected by most policymakers, the hot labour market coupled with high inflation is raising concerns for the Biden administration and the Federal Reserve.

This week, the US central bank raised its main interest rate half a percentage point for the first time since 2000 — to a target range of between 0.75 per cent and 1 per cent — in an effort to more rapidly cool the economy and stamp out high prices.

“Labour demand is very strong, and while labour force participation has increased somewhat, labour supply remains subdued,” said Fed chair Jay Powell during his post-meeting press conference. “Employers are having difficulties filling job openings, and wages are rising at the fastest pace in many years.”

President Joe Biden will travel to Cincinnati, Ohio on Friday to tout the strength of the recovery under his watch, particularly in the manufacturing sector in a state that is disproportionately linked to America’s industrial base.

The White House has noted 473,000 of the more than 6mn jobs created since Biden took office were in the manufacturing sector, which is now approaching pre-pandemic levels of employment.

But job vacancy rates are at extremely high levels, and many employers are struggling to fill positions, causing hardship for small businesses in particular and contributing to higher wages and prices.

The labour department will release the data at 8:30am eastern time on Friday.