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What To Expect From This Week’s Closely Watched Monthly Labor Market Reports

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8 months ago

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What To Expect From This Week’s Closely Watched Monthly Labor Market Reports

Key Takeaways

  • Forecasters expect U.S. employers to have added nearly a quarter million jobs in April, fewer than March’s 303,000 but more than historical averages.
  • Should the job market stay hot as expected, there would be less pressure on officials at the Federal Reserve to cut interest rates to stimulate the economy.
  • Fed watchers will also keep a close eye on wage growth data, since Fed officials have expressed concerns about wage growth fueling inflation.

The job market has been steaming ahead lately, and forecasters don’t see any sign that it slowed down much in April.

Friday’s official report on jobs from the Bureau of Labor Statistics is likely to show employers tacked on another 240,000 jobs in April, according to a survey of economists by Dow Jones Newswires and the Wall Street Journal. That would be a slowdown from the 303,000 added in March, but still solid by historical standards. (For comparison, the economy added an average of 177,000 jobs each month in the three years leading up to the pandemic.) 

Hot Job Market Not Necessarily Good News

A still-hot job market would be good news for workers, but uncomfortable for financial markets. While this data is released after this week’s Fed meeting, it would be one more bit of data pushing policymakers at the Federal Reserve to keep interest rates higher for longer, maintaining upward pressure on borrowing costs for all kinds of loans. 

Fed officials have kept interest rates high to combat inflation but with the risk of causing unemployment to rise. If the job market stays resilient, there will be less urgency to cut interest rates to prevent job losses. 

Market Participants Also Watching Data on Wages

Markets will also be closely watching how much worker pay increased in April since Fed officials have worried that rapid wage increases could fuel inflation.

The median forecast calls for a 0.3% rise in average hourly wages. High wage increases and hot inflation could stoke concerns that the Fed will increase interest rates at some point to corral inflation that’s proved more stubborn than expected this year. 

“If inflation doesn’t reestablish a downward trend soon, the prospect of rate increases will come to the fore,” Sal Guatieri, senior economist at BMO Capital Markets, wrote in a commentary.

In addition to April’s jobs numbers, the bureau will also give more detail on March’s data when it releases the Job Openings and Labor Turnover Survey (JOLTS). Forecasters anticipate the report will show there were 8.7 million job openings in March, down from 8.8 million in February but still 1.4 openings per unemployed worker, well over the historical average.

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