WASHINGTON - US jobs growth came in markedly below analyst expectations in April while unemployment crept up, government data showed on May 3, signalling that the labour market is cooling.

But with the world’s biggest economy adding 175,000 jobs in April, hiring appears still resilient, despite the lower reading than the 315,000 jobs added in March, said the Department of Labour.

Analysts had expected growth of 250,000 jobs, according to Briefing.com.

The unemployment rate edged slightly higher from 3.8 per cent in March to 3.9 per cent in April.

While hiring has decelerated, the number of jobs added in April remains well above 100,000 – the average level that some economists say is needed to keep the unemployment rate steady.

For now, the latest figures could prove encouraging for policymakers looking to cool the economy gradually.

Apart from an easing in hiring figures, officials are also looking to a slowdown in pay gains as they seek to bring inflation lower over the long run.

In April, wage growth came in at 0.2 per cent – from 0.3 per cent in March – on a monthly basis, according to the Labour Department.

From a year ago, average hourly earnings were 3.9 per cent higher in April – slipping below 4 per cent for the first time since 2021.

Rising pressure

A solid labour market has helped to prop up consumption and economic growth despite higher interest rates, which typically make borrowing more expensive for households and businesses.

The situation has allowed Federal Reserve chairman Jerome Powell to push back this week against talk of stagflation – a scenario involving slow growth, high unemployment and elevated inflation.

At a press briefing on May 1, he told reporters: “I don’t see the ‘stag’, or the ‘flation’.”

But he has maintained that the central bank is ready to respond to an unexpected weakening in the jobs market.

For now, the Fed has maintained the benchmark lending rate at a 23-year high, most recently citing a lack of further progress in lowering inflation in doing so.

Current readings “support the view that rates cuts – and not hikes – are the base case scenario for the Fed this year”, said economist Rubeela Farooqi of High Frequency Economics in a note.

Pantheon Macroeconomics said in a recent report: “The underlying economic story here, we think, is that businesses – especially small, bank-dependent firms – finally are feeling the pressure from sustained high real interest rates.”

This comes as cash accumulated during the pandemic has been drawn down, and “rolled-over floating rate debt has become much more expensive”, Pantheon added. AFP