U.S. employers pulled back on hiring in April, adding 160,000 jobs, the lowest during last seven months, after a streak of robust monthly gains. Americans dropped out of the labor force in droves, signs of weakness that cast doubts on whether the Federal Reserve will raise interest rates before the end of the year.
The unemployment rate, obtained from a separate survey of U.S. households, held steady last month at 5%. Economists surveyed by Wall Street had forecast payrolls to rise by 205,000 and the jobless rate to remain at 5%.
"For those who had thought a June rate hike was in play, this was a nail in the coffin. This raises questions about a September rate hike. I would like to think the economy is in a better place at the end of the year," said Phil Orlando, chief equity market strategist at Federated Investors in New York.
The economic growth slowdown in the United States and overseas had result to volatility in financial markets and complicated the Federal Reserve's plans to gradually raise interest rates. Fed policymakers have signaled that they could raise rates twice this year. But a hiring slump, if sustained, could disrupt those plans.
"By adding to signs that economic weakness is lingering into the second quarter, these disappointing numbers greatly reduce the likelihood of the Fed hiking rates this side of the presidential election," Chris Williamson, chief economist at Markit, said.
According to the economic report, wages gains have improved. Average hourly earnings of private-sector workers rose by 8 cents last month, or 0.3%, to $25.53. From a year earlier, wages advanced 2.5%, a firmer gain than March’s increase. The most recent annual gain is a bit stronger than roughly 2% yearly increases recorded since the economy began steadily adding jobs in 2010.
The average workweek for private-sector workers was rose by 0.1 hour to 34.5 hours in April. The total number of hours worked increased 0.4% from the March and up better than 2% from a year earlier.