Unemployment Rate at 3.4%, A Historic Low
The U.S. unemployment rate dropped to 3.4% in April, tying the lowest rate since 1969, just three years after reaching a high rate of 14.8% in April 2020, demonstrating the resilience of the American economy.
253,000 jobs were created in April, despite interest rate hikes meant to slow the economy over the past year. The sectors with the largest growth in April were professional and business services, health care, leisure and hospitality, and social assistance. Currently, there are 1.6 job openings for every unemployed person in the country. The typical range is 1-1.2 job openings per unemployed person.
Labor Market Remains Strong, Despite High Interest Rates
This labor market growth has occurred despite the Federal Reserve increasing interest rates by 500 basis points since March 2022, the fastest monetary policy tightening campaign since the 1980s. Increasing interest rates is typically done to cool off the economy to slow inflation, which also typically will cause a decrease in employment.
"The worrisome trend of more layoffs just got completely revised away where the labor market isn't loosening up as much as Fed officials and markets had thought," said Christopher Rupkey, chief economist at FWDBONDS in New York.
Forecasters believe that the Federal Reserve is likely to halt interest-rate increases in June, due to uncertainty about their effectiveness in the current economy. The Fed will likely wait to collect more data before making additional decisions on changing interest rates.
If interest rate increases are paused in June, the job market will likely grow in coming weeks and months.