Job growth in the US cooled last month and the unemployment rate ticked higher, in a sign that some of the heat may be coming out of the world’s largest economy.
Employers added 175,000 positions in April, while the jobless rate rose from 3.8% in March to 3.9%, the Labor Department said.
It marked the first time in months that growth has been weaker than expected.
The labour market in the world’s largest economy has been closely watched for signs of slowdown, as borrowing costs hover at two-decade highs.
Analysts said the report could bolster the case for the Federal Reserve to cut interest rates later this year.
“At last there is evidence of some weakness in the US jobs market. Rate cuts will move back up the agenda as a result and there is little doubt that markets will take this as good news,” said Neil Birrell, Chief Investment Officer at Premier Miton Investors.
“While we shouldn’t make too much of single data prints, this could be the start of a positive trend for the Fed,” he added.
The Federal Reserve sharply increased interest rates starting in 2022, hoping to cool the economy and ease the pressures that were pushing up prices at the fastest pace in decades.
Analysts had been expecting the US central bank to cut rates this year, as inflation, which measures the pace of price rises, cooled.
But at 3.5% in March, it has remained above the bank’s 2% target, raising doubts about the timing of such moves.
An unexpectedly robust jobs market, which has bolstered consumer spending – and the wider economy – has added to those questions.
At the same time, it has raised hopes that the US will be able to avoid a painful economic downturn of the kind that has often historically accompanied a spike in borrowing costs.
Shares in the US opened higher after the latest jobs figures from the Labor Department.
Satyam Panday, chief US economist at the credit rating agency S&P Global Ratings, said the signs of a hiring slowdown were expected and should help cool inflation, without being so severe as to raise concerns about a recession.
“I would call it a decent jobs report but not too hot, so the Federal Reserve really likes this,” he said, adding that he expected the Fed would be ready to cut rates by “perhaps by sometime in the fall or maybe December.”
The pace of job growth in April remained relatively resilient, if slower than previous months.
Most sectors added workers, with health care firms driving the gains, according to the report.
Average hourly earnings rose 3.9% over the 12 months to April, a slower pace from the previous month, the Labor Department said.
By BBC News
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