CUNA Chief Economist Mike Schenk issued the following statement in response to the Labor Department’s April Employment Situation:
“The U.S labor market is hot. The U.S. Bureau of Labor Statistics today reported that April nonfarm payroll employment increased at a faster than expected pace – with 253,000 jobs added during the month. The unemployment rate declined from 3.5% in March to 3.4% in April and wage gains came in at 0.5% during the month. All of which flies in the face of the Federal Reserve’s aggressive efforts to reign in borrowing and spending to bring stubbornly high inflation down.
“Authors are likely tempted to re-write macroeconomic textbooks. This isn’t the desired result and, in many respects, it’s historically unprecedented.
“Both the labor force participation rate and the employment-to-population ratio were unchanged in April, at 62.6% and 60.4% percent respectively.
“Previous month’s employment increases were revised down modestly. But year-over-year increases in average hourly earnings were elevated at 4.4% - well above the 3.0% level that would be consistent with inflation at the Fed’s desired 2.0% target.
“The big take-aways in this month’s surprisingly strong report is that the Fed is now more likely to increase market rates again and also is likely to keep rates high for longer than previously anticipated.”