A closely watched report released by the Labor Department on Friday showed weaker than expected job growth in the month of April, although the unemployment rate still fell to its lowest level in over seventeen years.
The Labor Department said non-farm payroll employment climbed by 164,000 jobs in April compared to economist estimates for an increase of about 192,000 jobs.
The shortfall compared to economist estimates was largely offset by an upward revision to the job growth in March, with employment rising by 135,000 jobs compared to the addition of 103,000 jobs originally reported.
The job growth in April partly reflected increases in employment in the professional and business services, manufacturing, healthcare, and mining sectors.
Meanwhile, the report said the unemployment rate fell to 3.9 percent in April after holding at 4.1 percent for six straight months. The unemployment rate had been expected to edge down to 4.0 percent.
With the bigger than expected decrease, the unemployment rate dropped to its lowest level since a matching rate in December of 2000.
The drop in the unemployment rate was primarily due to a decrease in the size of the labor force, however, as the labor force shrank by 236,000 people compared to the 3,000 person uptick in the household survey measure of employment
The Labor Department also said average hourly employee earnings inched up by $0.04 or 0.1 percent to $26.84 in April.
Compared to the same month a year, average hourly earnings were up by 2.6 percent in April, unchanged compared to the revised growth seen in March.
James Knightley, Chief International Economist at ING, said, “It isn’t a particularly exciting report and certainly shouldn’t alter market expectations for monetary policy in any meaningful way, but it just feels a bit soft given the state of the economy.”
“Other surveys paint a stronger picture and we still believe that the wage story will turn higher and be the catalyst for the Fed to take a more aggressive stance on the inflation threat,” he added.