State of the Labor Market

April Jobs Report: Time to Adjust Our Monthly Job Growth Expectations?

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Today’s report of 164,000 jobs is below expectations, but people should not be disappointed – it is still well above the number of jobs needed to keep up with population growth. For an economy in its 91st straight month of job growth, it is impressive to still see job creation at this level. Expectations may need to be adjusted for the jobs report moving forward.

The unemployment rate fell to 3.9% – a new low, but the prime-age employment rate maintained steady at 79.2%. Over the next few months, it will be important to see if the recovery in the prime-age employment rate is starting to plateau. If it does, this could be a sign of wage growth to come, as the rate of workers entering the labor force slows down.

One additional note: the broadest measure of unemployment (U-6), which includes workers working part-time for economic reasons, the marginally attached, and the discouraged, finally fell to 7.8%, marking the first time it has finally reached its pre-recession low. However, the percent of the labor force that is working part-time for economic reasons has been hovering around 3.1% for a few months, which may mean that recovery in this measure is stalling out.

Overall, this report is consistent with an economy that is in the later stages of a recovery. Looking forward, if payroll growth continues to gradually slow and recovery in the prime-age employment population ratio stalls out, we could finally see wage growth begin to pick up.

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