WASHINGTON -- The U.S. labor market improved a bit last month, adding a solid 164,000 net jobs while the unemployment rate reached a new milestone, falling below 4 percent for the first time since 2000, the Labor Department said Friday.
But while job growth rebounded from a disappointing March figure that was revised up Friday to 135,000, other aspects of the closely watched monthly report were lackluster. And the drop in the unemployment rate was for a bad reason: The labor force shrank for the second month in a row.
The overall unemployment rate fell to 3.9 percent in April. The unemployment rate in Arkansas in March, the most recent measurement, was 3.8 percent.
Overall, the data show a labor market that remains resilient in the face of a potential global trade war but whose growth is slowing as the recovery from the recession this month became the second-longest in U.S. history.
"This jobs report is truly a mixed bag," said Mark Hamrick, senior economic analyst at financial information website Bankrate.com.
The gains reflect an economy that has been steadily expanding for almost nine years, gradually putting more people to work after the country endured the worst financial meltdown since the Great Depression in the 1930s.
"It's a Groundhog Day kind of employment report," said Michael Gapen, chief U.S. economist at Barclays PLC, referring to the film where actor Bill Murray's character must relive the same day over and over. "It's basically the same report we've had for the last five years, which in the past has been viewed unambiguously as good news. But my message to clients now is the more we get that kind of report going forward, the more I'm going to think we're closer to the end of the cycle."
Many employers say it's become difficult to find qualified workers. Even so, they haven't significantly bumped up pay in most industries. Average hourly earnings rose 2.6 percent from a year ago.
Many economists say the unemployment rate is now so low that wage growth should begin to climb this summer, since employers will face more pressure to boost pay in order to hire workers.
"It's just not sustainable for average pay growth to be so low in a labor market this tight," said Andrew Chamberlain, chief economist at the jobs site Glassdoor.
An encouraging sign for the economy is that the pace of hiring has yet to be disrupted by dramatic global market swings, a recent pickup in inflation or the risk that the tariffs being pushed by President Donald Trump could provoke a trade war. Over the past three months, monthly job growth has averaged 208,000.
Much of the economy's durability is attributable to the healthy job market. The increase in people earning paychecks has bolstered demand for housing, even though fewer properties are being listed for sale. Consumer confidence has improved over the past year. And more people are shopping, with retail sales having picked up in March after three monthly declines.
Manufacturers added 24,000 workers last month, a sign that possible tariffs on steel, aluminum and Chinese goods haven't altered hiring plans at most U.S. factories. Restaurants and hotels hired a net 18,000. The health care and social assistance sector added 29,300 jobs and the construction industry 17,000.
The monthly jobs reports have yet to show a consistent surge in average annual wage growth. Even so, workers in the private sector during the first three months of 2018 enjoyed their sharpest average income growth in 11 years, the Labor Department said last week in a separate report on compensation.
That pay growth suggests that some of the momentum from the slow but steady recovery from the 2008 financial crisis is spreading to more people after it had disproportionately benefited the nation's wealthiest areas and highest earners.
"Sooner or later, we're going to be running out of workers if the recovery continues, and that will put more upward pressure on wages," Alan Krueger, a Princeton University professor, said on Bloomberg Television.
With qualified job applicants harder to find in many industries, employers have become less and less likely to shed employees. The four-week moving average for people applying for first-time unemployment benefits has reached its lowest level since 1973.
The trend reflects a decline in mass layoffs. Many companies expect the economy to keep expanding, especially after a dose of stimulus from tax cuts signed into law by Trump that have also increased the federal budget deficit.
Inflation has shown signs of accelerating slightly, eroding some of the potential wage growth. Consumer prices rose at a year-over-year pace of 2.4 percent in March, the sharpest annual increase in 12 months. The Federal Reserve has an annual inflation target of 2 percent, and investors expect the Fed to raise rates at least twice more this year, after an earlier rate increase in March, to keep inflation from climbing too far above that target.
The home market, a critical component of the U.S. economy, has been a beneficiary of the steady job growth. The National Association of Realtors said homes sold at a solid annual pace of 5.6 million in March, even though the number of houses for sale has plunged. As a result, average home prices are rising at more than twice the pace of wages.
Information for this article was contributed by Jim Puzzanghera of the Los Angeles Times; by Josh Boak of The Associated Press; and by Katia Dmitrieva of Bloomberg News.
Business on 05/05/2018