Another solid month of job growth is expected to be recorded on Friday when the U.S. Labor Department delivers its employment data for April.
According to the median estimate in a Bloomberg News survey, economists believe that employers added 380,000 jobs in April — a slight deceleration from the 431,000 jobs added in March. The unemployment rate is expected to decline by one-tenth of a percentage point, to 3.5 percent, returning to its level in February 2020, which was the lowest rate since 1969.
The U.S. economy has regained more than 90 percent of the 22 million jobs lost at the height of coronavirus-related lockdowns in the spring of 2020. And labor force participation has recovered more swiftly than most analysts initially expected, nearing prepandemic levels. The labor supply over the past year has not kept up with the record wave of job openings, however, as businesses expand to meet the demand for a variety of goods and services.
That has helped push up wages — the April survey is expected to show average hourly earnings 5.5 percent higher than a year earlier — but those gains have been offset by a surge in prices.
High inflation began last spring as demand from households and businesses collided with a chaotic reordering of the supply of goods and labor, and it has persisted longer than the Federal Reserve expected. The price pressures have been compounded by the war in Ukraine, which has upended energy and commodity markets, and another spell of coronavirus lockdowns in China, which has caused renewed supply chain disruptions.
As a result, the central bank has firmly pivoted to raising interest rates in an effort to cool consumer spending, business lending and demand for workers. If borrowing costs reach what officials call “restrictive levels,” a recession and a reversal of job gains could follow.
A range of analysts believe that increased business costs and labor supply issues may cause the pace of employment to crest soon anyway: The chief economist at Goldman Sachs, Jan Hatzius, recently forecast that payroll monthly growth would ease to 200,000 jobs in the coming months and continue to decelerate.
Other economists remain more bullish about the labor market, citing the resilience of household spending and of business investment in production capacity, both of which fuel continued hiring.
“Overall, we expect another very strong employment report, with continued above-trend growth,” said Ellen Gaske, an economist at PGIM, an asset management firm. “But the supply of labor will also be important to watch and could help either speed up or slow down the pace of any further improvement in the unemployment rate.”
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