Strong growth in US employment expected in April; salary seen moderate By Reuters

By Lucia Mutikani

WASHINGTON (Reuters) – US employers likely maintained their hiring pace in April, while steadily raising workers' wages, pointing to solid economic growth and moderate inflationary pressures.

The Ministry of Labor's monthly employment report on Friday, closely monitored, is expected to support the decision taken on Wednesday by the Federal Reserve to keep interest rates unchanged and signal the lack of desire to adjust quickly monetary policy.

Fed Chairman Jerome Powell described the economy and job growth as "a little stronger than expected" and "inflation" a little weaker.

According to a survey conducted by Reuters with economists, non-farm payrolls probably increased by 185,000 last month, after a rise of 196,000 in March. Early hiring by the government for the 2020 census and winter storms in the Midwest are gauges to the forecast.

The expected employment gains in April would be close to the monthly average of 180,000 in the first quarter and well above the roughly 100,000 needed per month to keep pace with the growth of the working-age population.

"The job market is extremely strong," said Ryan Sweet, senior economist at Moody's Analytics in West Chester, Pennsylvania. "It's not an overheating and it's perfect for the Fed to keep interest rates unchanged."

Another month of strong job growth will be further evidence that the small increase of 33,000 jobs recorded in February was an aberration. It would also ease fears of a recession and reduce expectations of interest rate cuts this year, helped by a brief reversal of the US Treasury yield curve in March.

Employment growth remains strong, despite anecdotal evidence of labor shortages in the transportation, manufacturing and construction sectors, suggesting some slack in the labor market.

STABLE UNEMPLOYMENT RATE

The steady rise in wages keeps workers in the labor market and keeps those who have dropped out of work. Average hourly earnings are expected to have risen 0.3% in April after a slight increase of 0.1% in March. This would bring the annual rise in wages to 3.3%, against 3.2% in March.

Although wage growth is not strong enough to drive up inflation, it is enough to support economic growth, while stimulus measures stem from the $ 1.5 trillion tax cut from last year have decreased. The economy grew at an annualized rate of 3.2% in the first quarter, driven by higher exports and inventories, which accelerated compared to the 2.2% rate recorded during the first quarter. the period from October to December.

The unemployment rate is expected to remain at 3.8% in April, as more people were looking for work. The unemployment rate, the lowest in almost 50 years, is close to 3.7% that Fed officials expect by the end of the year. Economists say that the number of people receiving disability benefits has declined, reflecting the strength of the labor market.

"Given the recent improvement in economic activity, we expect more workers to be integrated into the workforce," said Sam Bullard, senior economist at Wells Fargo (NYSE 🙂 Titles in Charlotte, North Carolina.

The activity rate, or the proportion of Americans of working age who have a job or who are looking for one, has reached its highest level in more than five years in January. Participation has increased, especially among the middle-aged population, blacks and women.

Some economists expect employment growth to slow further this year with the reduction in available staff, which will drive up wages and bring inflation back to the 2% target of growth. Fed. A measure of inflation followed by the US central bank rose 1.6% yoy in March, the lowest gain in 14 months, after 1.7% in February.

"We think it will be harder and harder to find many new workers each month," said Lou Crandall, chief economist of Wrightson ICAP (LON 🙂 LLC, in Jersey City, New Jersey.

Employment on construction sites probably increased for a second consecutive month in April, but storms in the Midwest could have hindered recruitment in the weather-sensitive sector. Manufacturing employment is expected to rebound after a decline in March for the first time since July 2017.

Layoffs in the auto sector are putting pressure on the sector, as assembly plants are trying to cope with declining sales and a surplus inventory. The state wage bill is expected to increase further in April.