Forecasters expect a monthly report on US employment to show strong job growth continued last month, even as wage pressures kept moderating.
The figures, which were to be published yesterday by the US Bureau of Labor Statistics, were expected to show that employers boosted payrolls by 240,000 last month, a median estimate in a Bloomberg survey showed.
Average hourly earnings likely advanced 4 percent over the past 12 months, which would mark the slowest pace of increase in almost three years.
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Robust employment gains coupled with slowing wage growth would support the US Federal Reserve’s wait-and-see approach on interest rates as officials ponder whether lower borrowing costs would still be appropriate this year following higher-than-expected inflation readings in the past few months.
“Another upside surprise to payrolls would further the recent narrative of few or no rate cuts from the Fed, but Fed officials have been downplaying any hawkish reaction to stronger employment, and a downside surprise to employment would lead to a sharp pricing-in of more Fed rate cuts,” Citi economists Veronica Clark and Andrew Hollenhorst wrote in a note on Tuesday previewing the numbers.
While economists generally see payroll gains stepping down from the first quarter’s booming pace, a 240,000 increase would still be above the average pace over the second half of last year — and is the most optimistic estimate since October 2022.
Many have cited surging immigration as a reason employment growth remains so strong even at a point in the business cycle when it would be natural to expect slower hiring.
“Elevated immigration boosted labor supply by roughly 80[,000] per month last year, relative to normal, and we expect a continued tailwind averaging 50[,000] per month this year,” Goldman Sachs economist Spencer Hill wrote in a note on Thursday.
“Given the still-elevated level of job openings and the ramp-up of the spring hiring season, we assume many of these individuals found jobs during the April survey period, including in the construction and leisure sectors,” Hill said
Forecasters expect average hourly earnings rose 0.3 percent last month, similar to March’s increase. That would bring the year-over-year rate to 4 percent, which would represent the smallest 12-month increase since June 2021.
Recent minimum-wage increases in California might present upside risks, though estimates of the impact vary widely. Bloomberg Economics sees the state’s wage hike for fast-food workers contributing to an above-consensus 0.4 percent increase in average hourly earnings.
Economists expected unemployment and labor force participation to remain unchanged at 3.8 percent and 62.7 percent respectively.
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