Jobs: Full Pandemic Recovery by Mid-July Likely

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428,000 jobs were added in April, a robust amount that indicates the economy is on track to recover all its pandemic job losses by mid-July. However, jobs will likely not recover to their 2019 upward trendline until late next year, and so the labor shortage will likely continue for a while. As the pandemic has eased, many jobs are still being added in services sectors, such as hotels, restaurants, retail and entertainment. Other areas of labor shortage that are continuing to see strong job gains are doctors’ offices, home health care, trucking, warehousing, and delivery drivers.

The unemployment rate held steady at 3.6%, and wage rate growth slowed a tad to 5.5%. It’s too early to say if this marks the beginning of a slight easing in the labor shortage, but if this continues, then the unemployment rate may slow its descent to near 3%, and wage growth could fall to 4% by the end of the year. 

The employment report should keep the Federal Reserve on track to keep raising short-term interest rates. If both inflation and wage rate growth keep easing, then it’s possible that the Fed may temper its current aggressive plan to raise rates and cut its portfolio of assets.