April jobs report likely reinforces Fed's aggressive rate hike plan
Labor secretary on April jobs report: ‘Opportunity’ to focus on specific states
U.S. Department of Labor Secretary Marty Walsh reacts to the economy adding 428,000 jobs in April, beating estimates by economists.
The April jobs report revealed another month of robust hiring, likely solidifying the case for the Federal Reserve to pivot toward a mega-sized interest rate hike as it seeks to cool red-hot inflation.
Employers added 428,000 jobs last month, the Labor Department said in its monthly payroll report released Friday, beating the 391,000 jobs forecast by Refinitiv economists. It marked the 12th consecutive month that job gains topped 400,000. The unemployment rate, meanwhile, held steady at 3.6%, the lowest level since February 2020.
HOW THE FEDERAL RESERVE MISSED THE MARK ON SURGING INFLATION
Wages, meanwhile, rose 5.5% in April from the previous year and 0.3% on a monthly basis. While that was a slight moderation from March, it's still nearly double the pre-pandemic average of 3.3%.
The strong job growth, coupled with fast wage growth and the resilience of the U.S. economy in the face of potential threats like rising interest rates and the hottest inflation in 40 years, likely reinforces the Fed's aggressive policy-tightening course as it seeks to soften consumer demand in order to curb soaring prices.
"This report should reinforce the Fed’s current plan of fighting inflation, without having to give much attention to the labor market, which remains healthy," Sameer Samana, Wells Fargo Investment Institute global market strategist, said.
WHAT COMES NEXT FOR THE FEDERAL RESERVE IN ITS FIGHT TO COOL INFLATION?
The data comes just two days after the Fed on Wednesday raised its benchmark interest rate by a half point for the first time in two decades as policymakers ratcheted up their fight to tame inflation. It followed a smaller, quarter-point hike in March. The Fed also announced that it will start reducing its massive $9 trillion balance sheet, which nearly doubled in size during the pandemic as the central bank bought mortgage-backed securities and other Treasurys to keep borrowing cheap.
Collectively, the steps mark the most aggressive tightening of monetary policy in decades as the Fed races to catch up with inflation, which hit a fresh 40-year high in March. It's likely just the beginning of a series of moves designed to curb consumer demand.
In remarks after the two-day meeting, Fed Chairman Jerome Powell told reporters that similarly sized hikes are on the table at future meetings.