The U.S. labor market has been one of the brightest spots in a long recovery marked by slow economic growth. Non-farm payrolls rose by 211,000 in April. Private-sector hiring expanded by 194,000, while 17,000 were added to government payrolls. The unemployment rate fell to 4.4% as the labor force participation rate edged down 0.1 percentage points to 62.9%. Average hourly earnings rose a healthy 0.3%, but the year-on-year metric edged down to 2.5% from 2.6% in March
The pace of hiring picked up again in April and the unemployment rate fell to the lowest level in nearly a decade, providing reassurance the broader economy remains on track and is poised for a stronger showing after a lackluster start to the year.
To support better economic growth, especially when productivity gains have been weak, employers need to draw more workers into the labor force. That could become a challenge because the share of Americans working or seeking work has generally declined in the past decade, in part reflecting the aging of the U.S. population. The slight drop in the participation rate in April could reflect, at a minimum, a slower flow of workers leaving the labor force.
At 2.5%, wage growth is still sufficient to provide real gains in purchasing power. This should flow through to consumer spending, providing the impetus for stronger economic growth in the remainder of 2017.