US Economy Surprises with 253,000 Jobs Created in April Despite Rising Interest Rates and Inflation
The US economy created 253,000 jobs in April, according to the Labor Department, marking a surprise jump from March and showing the resilience of the labor market despite rising interest rates and high inflation. The unemployment rate also fell to 3.4% from 3.5%, tying for the lowest level since 1969, and average hourly earnings rose 0.5% for the month, more than the 0.3% estimate. Wages rose by 4.4% on a yearly basis, surpassing the predicted gain of 4.2%. Leisure and hospitality, health care, and social assistance were among the industries that saw job gains, though the leisure and hospitality sector’s growth has slowed compared to recent months.
Despite recent banking crises and recession fears, the Federal Reserve raised its benchmark interest rate another quarter percentage point, taking it to its highest level since August 2007. The continued strength in the job market defies economists’ predictions that the rate hikes would dampen hiring. Federal Reserve Chair Jerome H. Powell said on Wednesday that he believes it is more likely than not that the US will avoid a recession, especially since unemployment is still low and the job market is still growing. However, he didn’t rule out the possibility of a mild recession and said that the Fed will be closely monitoring economic indicators over the next month to determine whether Wednesday’s interest rate hike will be the last for a while.
The job figure that was stronger than anticipated and the sudden increase in wages may cause concern for the Fed. They had approved the tenth consecutive interest rate hike on Wednesday, but have now indicated the possibility of pausing the tightening cycle. The bank troubles and recession fears have led many banks to become more cautious about making loans, following the collapse of two big regional banks in March and a third in April, which has led to a fall in overall job openings to 9.6 million in March, the lowest number in nearly two years.
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