Economy adds 164K jobs in April, unemployment lowest since 2000

The U.S. economy added 164,000 jobs in April, a modest number that was less than expected as the nation’s labor market maintains a steady pace of growth. 

The unemployment rate fell to 3.9 percent, the lowest level since December 2000, from 4.1 percent in March, where it had held for six months, the Labor Department reported on Friday.

Expectations were for an April gain of about 190,000.

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The economy is staying the course even as President Trump’s threats of hefty tariffs on China and some U.S. allies have unnerved businesses and stock markets, injecting uncertainty into the economy.

Trump took to Twitter to tout the low unemployment number.

“JUST OUT: 3.9% Unemployment. 4% is Broken!” the president tweeted. 

JUST OUT: 3.9% Unemployment. 4% is Broken! In the meantime, WITCH HUNT!

— Donald J. Trump (@realDonaldTrump) May 4, 2018

Trump’s trade team, including U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross, are just finishing a trip to China to discuss billions in tariffs that Trump has proposed on Chinese imports.

With a tightening labor market, job growth is expected to slow down somewhat as the unemployment rate drops into the rarely seen 3 percent range.

But wage growth remains stubborn, and companies have been slow to raise wages despite getting a boost to their bottom lines from the GOP’s tax-cut bill.

Businesses continue to complain that they can’t find enough qualified workers to fill openings. 

In April, average hourly earnings were up 2.6 percent for the year.

Jason Furman, former head of the Council of Economic Advisers under President Obama and a Harvard professor, said that while the 3.9 percent unemployment rate “is positively exciting,” the slow rate of pay increases is “pretty disappointing.” 

Robert Frick, corporate economist with the Navy Federal Credit Union, said the slower pace of wage growth shows that “workers are not sharing in the expansion as they should, and that has consequences for the expansion given two-thirds of [gross domestic product] is consumer spending.” 

“We need wage increases well above 3 percent for consumer spending to accelerate at a healthy pace,” Frick said.  

Jobs in the previous two months were adjusted to 30,000 more than previously reported.

February’s employment was lower than reported, falling to 324,000 from 326,000, while March’s figure, which came in well below expectations at 103,000 in the initial report, was better than first reported, at 135,000.

Charles Seville, Fitch Ratings’ head of North American sovereigns, said the unemployment rate falling below 4 percent “is an unmistakable signal of a tighter labor market.”

“There was also a solid rise in hours worked, particularly in goods-producing industries, even when energy is stripped out, continuing a trend,” Seville said. 

“But there was little evidence of an acceleration in wage costs.” 

Job gains averaged 208,000 over the past three months, down from a 242,000 average in the previous estimates, which is enough to get workers off the sidelines and into the labor market.

Employers have added jobs for 91 straight months, and the economic expansion, which began in June 2009, is now in its 107th month, which is the second-longest expansion in U.S. economic history.

Mark Zandi, chief economist for Moody’s Analytics, said this week he expects the nation to break the record for the longest period of growth in June 2019.

The nation’s longest span of growth lasted 120 months, from 1991 to 2001.

Jobs growth was widespread across sectors again last month.

In April, manufacturers added 24,000, totaling 245,000 for the past year.

Health care added 24,000 jobs in April and 305,000 jobs over the year.  

Employment in mining increased by 8,000 last month, and mining employment has risen by 86,000 since a low in October 2016. 

Construction added 17,000 jobs last month.

Other good news in the report showed that African-American unemployment fell to 6.6 percent, the lowest level since 1972.

Martha Gimbel, director of economic research at Indeed, said that the U-6 rate — the broadest measure of unemployment — dropped to 7.8 percent in April, the best showing since July 2001.

“However, the percent of the labor force that is working part-time for economic reasons has been hovering around 3.1 percent for a few months, which may mean that recovery in this measure is stalling out,” Gimbel said.

Gimbel said that if the prime-age employment rate plateaus, that could signal “wage growth to come as the rate of workers entering the labor force slows down.”

“Overall, this report is consistent with an economy that is in the later stages of a recovery,” she said. 

Updated at 10:21 a.m.