Over 288,000 new jobs were created in the United States this April, the highest level of employment growth since late 2012. The nationwide unemployment rate also fell to just 6.3%, according to new information released by the Department of Labor.
Despite the encouraging figures, economists have warned that the job growth and decline in unemployment was largely due to a reduction in the total size of the US labour force. The unemployment rate is at its lowest point since 2008, although it’s now measured using different metrics and scales than previously.
Tom Porcelli, a chief US economist at RBC Capital Markets, described the new Labor Department report as a “flat out good report.” Like other economists, he pointed out the decline in the size of the labour force: “The decline in the unemployment rate was a function of the labour force falling by 806,000 – that is a gargantuan decline.”
While economists have praised the decline in unemployment, many have expressed concerns about slow wage growth. Private sector hourly wages didn’t increase at all in April and have only budged by 1.9% in the last year. US GDP growth has also been on the decline, with the first quarter growth rate measuring just 0.1% last month.
In addition to improvements to the unemployment rate, the amount of support for the US economy provided by the Federal Reserve has declined. Earlier this month, the Federal Reserve continued its program of scaling back economic support, with its monthly bond buying programme trimmed to just $45 billion per month.
The reserve bank has been purchasing bonds as a means of keeping interest rates as low as possible in order to fuel borrowing and economic growth. The job growth of the last month was higher than expected; economists had predicted 218,000 new jobs in April instead of 288,000.