Employers in the United States added 175,000 workers to their payrolls in April, the Department of Labor said Friday.
The unemployment rate ticked up to 3.9 percent from 3.8 percent in the prior month.
Economists had forecast payrolls would grow by 240,000 and the unemployment rate would hold steady at the prior month’s 3.8 percent.
Last December, the Federal Reserve said it was probably through hiking rates and officials projected they would cut rates three times in 2024. Prices in the bond and derivatives markets implied that the Fed would cut rates by as many as six times beginning with the March meeting. After the Fed surprised many investors by indicating in January that it would not be ready to cut at its March meeting, many investors believed cuts would begin at the next meeting in May.
Stronger inflation reports for the first three months of the year have dashed hope for a rate cut early this year. The market now implies almost no chance of a rate cut at the Fed’s next meeting in June, one-in-three odds of a rate cut in July, a 61 percent chance of a cut in September, and a 75 percent chance of a cut in November.
The Fed typically cuts rates when the economy appears to be weakening. Although growth was very strong last year, especially in the second half of the year, economists believed that the rate hikes the Fed had implemented from March of 2022 through July of 2023 would become a significant drag on growth and the labor market this year. Instead, the economy has been adding jobs at a breakneck pace.
Some Democrat politicians, progressive economists, and Wall Street analysts have said that the Fed is risking an unnecessary recession by holding back on rate cuts. Fed officials, including chairman Jerome Powell, have insisted that the strength of the labor market and the overall economy gives them room to be patient.
