The economy added 164,000 jobs last month and the unemployment rate dropped to 3.9 percent, the lowest rate in more than a decade.
Still, the jobs growth in April was lower than expected — economists in a Bloomberg survey had predicted 193,000 new jobs. But the Labor Department, which released the latest jobs data Friday, revised its number jobs figures upwards for March.
The numbers paint a positive picture overall, though economists said there were reasons to worry as the job market continues to tighten.
“Job growth is trending fairly high, [but] there’s a lot of uncertainty month to month,” said Scott Brown, the chief economist at the financial services firm Raymond James. “We expect the pace of job growth to be slowing because there’s not going to be that many people to hire.”
Here are top takeaways from the April report:
- Unemployment rate drops under 4 percent: After holding steady at 4.1 percent for six consecutive months, the unemployment rate dipped to 3.9 — the lowest since 2000. The tight labor market has forced companies to compete for skilled labor by offering tuition reimbursement, child care support and other benefits. Right now, “job seekers are in the driver’s seat when it comes to what they are looking for in a job,” Joyce Russell, the president of the staffing firm Adecco Staffing, wrote in an email.
- The skills gap problem: The low unemployment rate may be a good economic indicator in the near term. But analysts worry that many job seekers don’t have the skills required for jobs across a range of sectors, from manufacturing to marketing — an issue known as the “skills gap.” “It’s at a point now where employers are really desperate,” to find skilled workers, said Dan North, the chief economist at Euler Hermes North America. “It’s a very good situation if you’re looking for a job,” North added, but “It’s a little bit tougher if you can’t come in with the right skills.”
- Wage growth at a ‘slow pace’: Average hourly wages rose 4 cents in April, compared to an uptick of 7 cents per hour in March. Wages are up 2.6 percent over the past year. The numbers reflect a “slow pace of wage growth,” Andrew Chamberlain, the chief economist at Glassdoor Economic Research, wrote in blog post Friday. Economists attribute the slow wage growth to the skills gap, the steady decline in union membership in recent decades and the concentration of powerful firms within individual sectors of the economy, among other factors.
- What does this mean for interest rates? The jobs report sparked a fresh debate over how many times the Federal Reserve would raise its benchmark interest rate this year over concerns about inflation. “The Federal Reserve sees this report consistent with plans to hike interest rates a total of three times this year,” Mark Hamrick, Bankrate.com’s senior economic analyst, wrote in an email. Others said the central bank was certain to raise rates at least twice in 2018. “Two more hikes this year are a lock. That’s going to happen,” North said.
- Trade dispute causing further uncertainty: The trade dispute between the United States and China continues to generate market uncertainty, as firms and investors wait to see if the dispute will escalate into an all-out trade war. President Donald Trump this week extended a temporary exemption on steel and aluminum tariffs for the European Union, Canada and Mexico. But the European Union said that decision only “prolongs market uncertainty,” and investors elsewhere remain wary of the back-and-forth between China and the U.S. Both countries have threatened to impose tariffs on a broad range of goods. “People are really worried about this,” North said. “If we actually impose tariffs and there’s a real trade war, there’s no question it’ll have an impact on economic growth.”