260,000 new jobs in April as unemployment drops to 3.6%

Businesses hired 263,000 people in April, again defying many economists’ expectations that a tight labor market would slow down job creation. Economists were expecting about 190,000 jobs to be added for the month.

The unemployment rate ticked down to 3.6 percent, the lowest since December 1969, when it hit 3.5 percent. But it fell largely because people stopped looking for work, meaning fewer people were counted as unemployed.

Job gains were strongest in professional and business services, construction and health care. Manufacturing employment stayed flat from last month, while the retail sector lost about 12,000 jobs.

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“Jobs continued to grow fastest in middle- and high-wage industries, while wage growth was fastest in low-wage industries,” Martha Gimbel, director of economic research at the Indeed Hiring Lab, said in a blog post.

Wage growth steady, not spectacular

Wages grew 3.2 percent from the year-earlier period—a steady pace but below the rate wage growth would be expected to reach with such a low unemployment rate.

“Right now, at 3.2 percent annualized wage growth, we’re just at the bottom of the rate of wage growth of the last expansion, and we’re nowhere near how high wage growth was in the last half of the expansion in the 1990s — 4.5 percent or 5 percent,” said Robert Frick, chief economist of the Navy Federal Credit Union.

A rate of increase above 3 percent is the fastest rate of growth in nearly a decade, but it’s only 1 percentage point higher than the cost of living, which is increasing nearly 2 percent each year.

“That does explain why, despite a very low unemployment rate and modest gains in overall growth, the American public remains dissatisfied with where the economy is and where the country is,” said Joe Brusuelas, chief economist at the accountancy RSM. “That sluggish wage growth feeds into that.”

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