April's employment report is scheduled to be released Friday and economists say that non-farm payrolls likely increased last month by 192,000 jobs after a March increase of 103,000. The April jobs report did not show any pickup in inflationary pressures that have been worrying investors.
That was still the fewest amount of jobs created in six months and followed an outsized gain of 324,000 in February.
On other economic news, the final reading of US Consumer Sentiment Index came in at 98.8 in April, above market estimates, according to a survey released by the University of MI on Friday. April's low unemployment rate is getting a great deal of attention in the press since a rate below 4% is a rare phenomenon.
The job market hasn't been this good in a very long time.
In all, the number of people receiving aid dropped 77,000 to 1.26 million after April 21. Black unemployment was the lowest on record and for women, it was the lowest since 2000.
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"The longer the economy burns hot, the more workers are in the driver's seat negotiating with companies", said Andrew Chamberlain, chief economist at Glassdoor, a jobs site. The 10-year Treasury yield TMUBMUSD10Y, -0.15% were little changed at 2.94%. The dollar pared losses against a basket of currencies and US stock index futures trimmed losses.
"In April, the rise in average weekly earnings amounts to an annual increase of approximately $1,300 - a real boost for American families". 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. Employers, especially in the construction and manufacturing sectors, are increasingly reporting difficulties finding qualified workers. The Employment Cost Index (ECI), widely viewed by policymakers and economists as one of the better measures of labor market slack, increased solidly in the first quarter. Now, a large part of that is because companies were reluctant to cut wages during the depths of the crisis because of how much that would have hurt morale, so they kept a lid on wages even after things started to improve. "The outlook for rates is heavily dependent on expectations for inflation, which in term are influenced by wages".
Inflation is flirting with the Fed's 2 percent target. The Fed hiked rates in March and has forecast at least two more increases for this year. For the second time under President Trump, the African American unemployment rate hit the lowest level ever recorded, falling to 6.6 percent.
And the labor force participation rate fell to its lowest level since January, accounting for some of the drop in unemployment as people bowed out of the job hunt.
"Wages haven't been able to break out of the 2.5% to 2.8% range", Panday said.