Kiplinger Jobs Outlook: April Job Gains Better than Expected, but Narrowly Focused
Half of April job gains came from retail and e-commerce delivery roles.
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April’s job gain of 115,000 exceeded analyst expectations and indicated the economy is still doing OK, despite the rise in energy prices caused by the Iran war. Private employment rose by 123,000 as government jobs declined. Temporary help rose by 8,000, its fourth gain in a row, indicating a turnaround in the sector this year after a four-year slide. Total work hours rose for most industries.
But there were cautionary notes, as well. The job gains were somewhat narrow, as half came from general merchandise retailers and e-commerce delivery. Jobs added by the health care and social assistance sector (+54,000) and leisure and hospitality (+14,000) were positive, as usual, but below their recent norms. Sectors showing weakness included nondurable goods manufacturing, insurance, real estate, information, transit and government. Federal employment has declined for 15 consecutive months, and is down by 332,000 jobs since its peak in February of 2025.
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The unemployment rate was unchanged at 4.3%, and weekly initial unemployment claims were low. However, the number of people forced to work part-time because of slack business conditions rose for the second month. Also of concern is the decline in the labor force this year, and a decline in employment reported by households. The government’s survey of households is smaller than the payroll employment survey, and so its reported decline is less cause for concern, but still something to keep an eye on.
Average hourly earnings rose 3.6% over the past 12 months, and 3.7% for production workers (blue-collar and non-administrative employees). Wage growth has started to slow a bit because of the low rate of hiring, and should continue to ease. The more accurate quarterly Employment Cost Index, which showed 3.4% wage growth for the 12 months ending in March, has also shown a moderating trend.
The robust March and April job reports should dispel concerns at the Federal Reserve that the economy might be weakening. That means that interest rate cuts should remain off the table, but the labor market is not hot, meaning no real case for rate increases, either. The new Fed Chair, Kevin Warsh, takes over on May 15, but his first monetary policy meeting doesn’t take place until June 18.
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