(Reuters) – April payrolls data from the U.S. Bureau of Labor Statistics showed employment gains hit a seven-month low, casting doubts about the health of the economy and the likelihood of an interest rate hike by the end of the year.
Nonfarm payrolls increased by 160,000 last month, far below the 202,000 that economists polled by Reuters had forecast on average. The number was lower than the first-quarter average monthly job growth of 200,000.
Over the last 12 months, employment growth had averaged 232,000 per month.
The U.S. unemployment rate was unchanged in April and remains at 5.0 percent. The number of unemployed
persons was little changed at 7.9 million. Both measures have shown little movement since August.
The labor force participation rate decreased to 62.8 percent in April.
In addition, prior job growth estimates for March and February were revised downward. The February job gains were revised down from 245,000 to 233,000 and the March job gains were revised down from 215,000 to 208,000.
Mixed economic data and the slowing pace of global growth have weakened investors’ appetite for risk.
The U.S. economy grew just 0.5 percent last quarter on an annualized basis and inflation has been below the Fed’s 2 percent target for years. Dismal April jobs data indicated that the weakness in overall economic activity was spilling over to the labor market.
“For those who had thought a June rate hike was in play, this was a nail in coffin,” said Phil Orlando, chief equity market strategist at Federated Investors in New York. “The Fed is not going to change its policy statement in June at all. This raises question about a September rate hike. I would like to think the economy is in a better place at the end of year.”
An accommodative Federal Reserve and a recovery in oil prices have helped U.S. stocks rebound from sharp losses at the start of the year. However, the rally lost momentum in the past two weeks, weighed by underwhelming quarterly earnings and data.
Read more economic data reports on the BizTracker page.
