US added 428,000 jobs in April despite surging inflation
WASHINGTON — America’s employers added 428,000 jobs in April, extending a streak of solid hiring that has defied punishing inflation, chronic supply shortages, the Russian war against Ukraine and much higher borrowing costs.
Friday’s jobs report from the Labor Department showed that last month’s hiring kept the unemployment rate at 3.6%, just above the lowest level in a half-century. Despite the worst inflation in 40 years, the economy’s hiring growth has been remarkable. Employers have added at least 400,000 jobs for 12 straight months.
“With labor markets still strong, including rapid wage growth, we doubt that the Fed will abandon its hawkish policies,” said Paul Ashworth (chief U.S. economist at Capital Economics). The latest employment figures do contain some cautionary notes about how the job market is doing. The government revised down its estimate of job gains for February and March by a combined 39,000.
And the number of people in the labor force declined in April by 363,000, the first drop since September. Their exit slightly reduced the proportion of Americans who are either working or looking for work from 62.4% to 62.2%. Labor shortages have slowed many industries. The nation remains 1.2 million jobs shy of the number it had in early 2020, just before the pandemic hammered the economy.
“We need these people back,” said Beth Ann Bovino (chief U.S. economist, S&P Global).
Bovino noted that some Americans are remaining on the sidelines of the workforce out of lingering concerns about COVID-19 or because of difficulty finding affordable daycare for unvaccinated children. In the meantime, employers continue to offer pay raises. Hourly wages increased by 0.3% between March and April and 5.5% compared to a year ago. However, prices are rising faster than wages.
“Yes we saw a rise in wages,” Bovino stated. But with inflation at 40-year highs “people are still squeezed. ”
Across industries last month, hiring was widespread. Factories added 55,000 jobs, the most since last July. Warehouses and transportation companies added 52,000, restaurants and bars 44,000, health care 41,000, finance 35,000, retailers 29,000 and hotels 22,000. Construction companies, which have been slowed by shortages of labor and supplies, added just 2,000. It’s not clear how long this jobs boom will last. The Fed this week raised its key rate by a half-percentage point — its most aggressive move since 2000 — and signaled further large rate hikes to come. It will be more expensive to spend and hire as the Fed increases its rate.
In addition to this, the vast amount of economic aid that the government used to provide to households has ended. The economic outlook has been clouded by the Russian invasion of Ukraine, which has accelerated inflation. Some economists warn that there is a growing danger of recession.
Despite rising borrowing costs and steep price rises, the job market’s resilience is remarkable. The Labor Department has provided additional evidence that the job market is still booming this week. It reported that only 1. 38 million Americans were collecting traditional unemployment benefits, the fewest since 1970. And it said that employers posted a record-high 11.5 million job openings in March and that layoffs remained well below pre-pandemic levels.
In addition, there are now two jobs available for every person who is unemployed. This is the highest ever such ratio.
Another sign that workers have unusual leverage in the job marketplace is that 4.5 million people quit their jobs last March, apparently confident they will find better opportunities elsewhere.
Chronic shortages of goods, supplies and workers have contributed to skyrocketing price increases — the highest inflation rate in 40 years. The financial landscape was dramatically impacted by Russia’s invasion in Ukraine in February. This led to a dramatic increase in global oil and gas prices and a severe clouding of the national and international economic picture.
The Fed, which many economists believe was too slow to recognize the threat of inflation, is raising rates aggressively. Its goal is a difficult one, a soft landing.
” Trying to slow down the economy enough, but not causing a slump,” stated Rubela Farooqi (chief U.S. economist at High Frequency Economics). Their track record in this area is not very good. “
Giacomo Santangelo of the jobs research firm Monster is among economists who say they think a recession is coming. Santangelo stated that the Fed doesn’t have any other options than to raise rates to combat inflation.
Many businesspeople, especially those in hospitality and retail, are still struggling to find labor, particularly in today’s tight labor market.
David Culhane, is one of them. Since opening the White Mountain Tavern in Lincoln, New Hampshire, in August 2020, Culhane has raised his hourly starting wage from $12 to $15. Yet he still can’t bring his employee count up to the 15 he needs. He is worried that he won’t have enough people to handle summer tourist season. His labor shortages can be costly. Culhane could easily serve more customers if he had a full staff. In the meantime, electricity and food prices are on the rise.
In response, Culhane has had to raise the prices of some menu items by up to 50%. He now prices his 8-ounce steak with truffle parmesan fries and asparagus at $25, up from $17. He believes he has no other choice.
“As inflation rises, and if that doesn’t happen, we won’t be able to adjust to it,” he stated. .”
To achieve the staff levels they need to succeed, some companies might have to do more than raise salaries.
“Employers and business leaders will need to go above and beyond salary increases to win the war for talent,” said Karen Fichuk, CEO of the staffing company Randstad North America. “That will mean responding to new cultural norms and generational differences.”
Many young people, she said, want jobs that provide an attractive work-life balance, prioritize diversity and offer the opportunity to make a positive difference in society. Grace Rosenback, Mountainair, New Mexico, is one of those who has taken advantage of more flexible working arrangements. Rosenback has found the freedom to work remotely a blessing after the pandemic.
After undergoing a heart transplant in 2019, Rosenback, now 49, had to stop working for a year. She is a designer of presentations for marketing companies and other companies. After the four-month contract expires, Rosenback will be working remotely for a contractor.
The business world, she said, “has pretty much accepted that everyone can be remote.”
AP Retail Writer Anne D’Innocenzio contributed to this report from New York.
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