U.S. joblessness at 3.6%, lowest since 1969

U.S. employers added a robust 263,000 jobs in April, suggesting that businesses have shrugged off earlier concerns that the economy might slow this year and now anticipate strong customer demand.

263,000 jobs created in April with businesses reporting difficulty finding workers

A man wearing a hoodie stands in a warehouse surrounded by tall shelves filled with merchandise. An Amazon Prime bag is in focus in the foreground.
U.S. businesses were hiring in April, including Amazon which was preparing for one-day delivery for Prime members. (Mark Lennihan/The Associated Press)

U.S. employers added a robust 263,000 jobs in April, suggesting that businesses have shrugged off earlier concerns that the economy might slow this year and now anticipate strong customer demand.

The unemployment rate fell to a five-decade low of 3.6 per cent from 3.8 per cent, though that drop partly reflected an increase in the number of Americans who stopped looking for work. Average hourly pay rose 3.2 per cent from 12 months earlier, a healthy increase after years of stagnation in wages. 

Friday's jobs report from the Labor Department showed that solid economic growth is still encouraging strong hiring nearly a decade into the economy's recovery from the Great Recession. The economic expansion is set to become the longest in history in July.

Many businesses say they're struggling to find workers, yet each month they seem to add a substantial number. Some have taken a range of steps to fill jobs, including training more entry-level workers, loosening educational requirements and raising pay.

Years of steady hiring have sharply lowered unemployment for a range of population groups. The unemployment rate for women fell last month to 3.1 per cent, the lowest point since 1953. The rate for Latinos dropped to 4.2 per cent, a record low since 1973, when the government began tracking the data.

Even the level of long-term unemployed is shifting downwards.

Service sector growing

Most of last month's job growth occurred in services, which includes both higher-paying jobs in information technology and lower-paying temporary work. Manufacturers added just 4,000 jobs. Construction firms gained 33,000, mostly on public infrastructure projects.

Professional and business services, which include IT networking jobs as well as accountants and engineers, led the gains with 76,000. Education and health care added 62,000 jobs, while a category that mostly includes restaurants and hotels gained 34,000.

On March 7, visitors to the Pittsburgh veterans job fair meet with recruiters at Heinz Field in Pittsburgh. The jobless rate among veterans sits at 1.7 per cent. (Associated Press)

The brightening picture represents a sharp improvement from the start of the year. At the time, the government was enduring a partial shutdown, the stock market had plunged, trade tensions between the United States and China were flaring and the Federal Reserve had just raised short-term interest rates in December for a fourth time in 2018. Analysts worried that the economy might barely expand in the first three months of the year.

Yet the outlook soon brightened. Chair Jerome Powell signalled that the Fed would put rate hikes on hold. Trade negotiations between the U.S. and China made some progress. The economic outlook in some other major economies improved. Share prices rebounded.

The Fed's decision to slow rate hikes is likely to hold, despite the bullish numbers, according to RBC senior economist Nathan Janzen.

"The policymakers at the Federal Reserve already knew that domestic labour markets were looking solid when they moved decidedly to the sidelines in terms of future interest rate hikes," he said.

"Consumer price inflation trends still look quite benign. Wage growth has been OK, but the 3.2 per cent year-over-year rate in April is still not a pace that would be expected to generate significant upside inflation pressures."

1st quarter growth strong

The government reported that the U.S. economy grew at a 3.2 per cent annual rate in the January-March period — the strongest pace for a first quarter since 2015. That said, the growth was led mostly by factors that could prove temporary — a restocking of inventories in warehouses and on store shelves and a narrowing of the U.S. trade deficit. By contrast, consumer spending and business investment, which more closely reflect the economy's underlying strength, were relatively weak.

But American households have become more confident since the winter and are ramping up spending. Consumer spending surged in March by the most in nearly a decade. A likely factor is that steady job growth and wage increases have enlarged Americans' paychecks.

Businesses are also spending more freely. Orders to U.S. factories for long-lasting capital goods jumped in March by the most in eight months. That suggested that companies were buying more computers, machinery and other equipment to keep up with growing customer demand.