The labor market bounced back in April amid milder weather as employers added 211,000 jobs, providing evidence that weakness the prior month was a blip that likely won’t keep the Federal Reserve from raising interest rates at its next meeting.
The unemployment rate, which is calculated from a different survey, fell to 4.4% from 4.5%, the Labor Department said Friday.
Economists expected 190,000 job gains, according to the median estimate of a Bloomberg survey.
Unusual weather patterns have caused sharp swings in payrolls this year. Unseasonably warm temperatures in January and February brought forward hiring in sectors such as construction, retail, and leisure and hospitality, with monthly job gains topping 200,000. But that led to an offsetting tumble in March that was amplified by snowstorms in the Midwest and Northeast, leaving employment growth that month at about half the earlier pace.
Goldman Sachs expected April’s more favorable temperatures to spur pent-up hiring in construction and other areas hurt by March’s foul weather, oosting overall payroll additions by 25,000 to 40,000.
At the same time, retailers are shedding jobs as more Americans shop online, a dynamic that Goldman says will drag down monthly job growth by an average 10,000 or so in the months ahead. Retailers added 58,000 jobs the past year, down from an average of nearly 275,000 in each of the prior two years.
And Diane Swonk, who heads DS Economics, reckons a federal hiring freeze from late January to mid April curtailed government staff additions last month by as much as 10,000.
A second straight disappointing jobs report last month, combined with anemic economic growth in the first quarter, likely would lower the odds of an anticipated Fed rate increase in June. The Fed has raised rates twice since December and central bank officials are forecasting two more hikes in 2017.
Even with the weather-related volatility, monthly job growth in the first quarter was close to last year’s 180,000 average, which marked a noticeable slowdown from an average 226,000 in 2015. Employers are struggling to find workers because the sub-5% unemployment rate has left a smaller pool of jobless Americans on the sidelines. Many economists believe monthly payroll gains will average about 170,000 this year, but that’s more than enough to further lower unemployment.
Other labor market indicators have been mixed. Payroll processor ADP said businesses added a solid 177,000 jobs last month. And initial jobless laims, a gauge of layoffs, returned to four-decade lows after edging up in March. But indexes of both manufacturing and service-sector hiring declined in April.
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