US economy gains only 175,000 jobs, unemployment hits 3.9%

U.S. job creation experienced a notable slowdown last month, with only 175,000 jobs added in April, according to data from the Bureau of Labor Statistics released on Friday. This figure represents the smallest increase since October of the previous year and is a reaction to the Federal Reserve’s efforts to reduce demand and control rising inflation.

The job growth deceleration aligns with economists’ predictions of a slowdown due to sustained high interest rates. Despite the weaker growth, financial markets reacted positively, with significant increases in Dow, S&P 500, and Nasdaq futures.

Although the job additions in April were substantially lower compared to the 315,000 jobs revised for March, they are consistent with the average job growth prior to the pandemic, during the longest period of employment expansion in U.S. history, where monthly job gains averaged 183,000.

Michael Pugliese, a senior economist at Wells Fargo, indicated in a CNN interview that the labor market remains robust and tight, though not as constricted as in late 2021 or throughout 2022.

April’s slight increase in the unemployment rate to 3.9% continues the trend of sub-4% rates seen over the last 27 months, a consistency not observed since the late 1960s. This rate was slightly higher than the 3.8% economists expected.

The health care and social assistance sectors led April’s job gains, contributing about 87,000 new jobs. Job increases were also noted across various other sectors including transportation, warehousing, and retail.

Jane Oates, a former Labor Department official and senior policy adviser at the nonprofit WorkingNation, described the job figures not as a sign of economic distress but as an adjustment to a more sustainable growth path. She highlighted that while early 2024 suggested an economic uptick with persistent inflation and strong spending, signs of a labor market cooldown were becoming evident through moderating wage growth and declining job turnover.