Non-Farm Payroll Preview: Employment growth in April will slow down, but there will be no signs of a recession.
FactSet data shows that economists expect the US economy to add 180,000 jobs in April, a slowdown from the 236,000 jobs added in March. The unemployment rate will rise slightly from 3.5% in March to 3.6%.
Tonight at 8:30, the US Department of Labor will release the April non-farm payroll report.
Employers are expected to add jobs at a slower but still strong pace in April as demand for workers cools and the labor market steadily recovers to pre-pandemic levels.
According to FactSet data, economists expect the US economy to add 180,000 jobs in April, down from 236,000 in March. Economists also expect the unemployment rate to rise slightly from 3.5% in March to 3.6%.
A key data point in the Fed's Friday report will be wage growth, as Fed officials hope that wage growth will slow as labor demand declines. Economists expect average hourly earnings to increase by 0.3% in April, with an annualized increase of 4.2%, the same as in March.
Although job growth in April may be the slowest in over two years since the US economy cut jobs in December 2020, it will still be seen as a healthy labor market.
This will be considered roughly consistent with pre-pandemic growth rates: an average of just under 190,000 jobs were created each month in the year ending in February 2020, just before the pandemic broke out.
Citigroup analysts Veronica Clark and Andrew Hollenhorst said: "The market expects evidence that an economic recession is imminent, but it may not be found in the April employment report."
Veronica Clark and Andrew Hollenhorst pointed out that recent strong labor force growth, including an average of 345,000 jobs created per month since the beginning of the year, means that even if April data unexpectedly declines, it is unlikely to indicate "rapid and substantial weakening of economic activity."
Also worth noting is that if job creation is seen across all sectors, it will be a strong sign that employers throughout the economy are hiring and producing.
The US Department of Labor's diffusion index shows that as of March, more industries added jobs than cut them, but some economists expect this trend to begin to shift as some sectors of the economy begin to slow down.