May 5, 2023 - Economy

The labor market is still holding strong

Illustration of a "help wanted" sign as an open door

Illustration: Sarah Grillo/Axios

The indicators in the April payrolls report tell a near-universal story: America's workers continue to experience the strongest labor market in years — and, by some measures, the best on record.

Why it matters: There is a lot of doom and gloom about the economy, stirred up further in recent weeks by bank failures that raise questions about knock-off economic effects.

  • But the details of the latest jobs report should put those worries to rest: The labor market is still strong, with plenty of opportunities for workers.

What they're saying: "The labor market surprisingly remains hot and tight as indicated by a trifecta of strength reported in the three key categories in April – employment, the unemployment rate, and average hourly earnings," Kathy Bostjancic, chief economist at Nationwide, wrote in a note.

By the numbers: The unemployment rate fell back to 3.4%, matching the rate seen in January. Before that, you'd have to go back a half-century to see a lower jobless rate.

  • The labor market added 253,000 jobs in April, though job gains were softer than believed in the prior two months. Even with those revisions, the economy has still added a solid 666,000 jobs over the past three months.
  • Meanwhile, the labor force participation rate among prime-age workers (those aged between 25-54) continued to climb to 83.3% — officially recovering to levels seen during the 2008 financial crisis. For prime-age women, the participation rate is the highest (77.5%) on record.

Details: Wages rose at a faster rate (0.5%) last month, after steadily decelerating since November 2022.

  • Over the past three months, average hourly earnings are up an annualized 4.2% — down from the 4.5% from the previous three-month period.

The big picture: The details of the report may drum up concerns among officials at the Federal Reserve looking for signs of a cooler labor market.

  • At a news conference earlier this week, Fed chair Jerome Powell acknowledged signs that the labor market was "coming back into better balance," though it remained "very tight."
  • Jobs growth has slowed from last year's breakneck pace, but that process may not be happening as much (or as quickly) as policymakers would like.
  • Yields on two-year Treasury bonds jumped after the release of the report, reflecting the possibility that a still-hot jobs market could mean higher rates.

The bottom line: "Fourteen months after the Fed began to lift interest rates, we are barely seeing a blip in the labor market," says Aaron Terrazas, chief economist at Glassdoor.

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