The Fed has been delaying any consideration of interest rate cuts until it gains more confidence that inflation is steadily slowing toward its 2% target.WASHINGTON — The nation’s employers pulled back on their hiring in April but still added a decent 175,000 jobs in a sign that persistently high interest rates may be starting to slow the robust U.S. job market.
“A slowdown in payrolls to a decent pace to start the second quarter, coupled with a slowing in wage gains, will be welcome news to policymakers," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “Current readings also support the view that rates cuts – and not hikes – are the base case scenario for the Fed this year.’’as the November presidential campaign intensifies.
“Certainly a cooler jobs report than we’ve seen,’’ said Michael Pugliese, senior economist at Wells Fargo. “But it’s not like it was disastrous: 175,000 is still pretty strong, and unemployment below 4% is still pretty healthy.’’ He expects hiring, which averaged a vigorous 242,000 from February through April, to continue to decelerate.
Temporary help jobs fell by more than 16,000. These positions are often seen as a potential indicator of where the job market is headed because companies sometimes try out temps before committing to full-time hires. The Fed raised its benchmark rate 11 times from March 2022 to July 2023, taking it to the highest level since 2001. Inflation did steadily cool as it was supposed to — from a year-over-year peak of 9.1% in June 2022 to 3.5% in March.
On a month-over-month basis, consumer inflation hasn’t declined since October. The 3.5% year-over-year inflation rate for March was still running well above the Fed’s 2% target.
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