Jobless Rate Plummets

U.S. hiring rebounded in April and the unemployment rate dropped below 4 percent for the first time since 2000, while wage gains cooled by more than forecast in a sign that the labor market still isn’t tight enough to spur inflation.

Payrolls rose 164,000 after an upwardly revised 135,000 advance, Labor Department figures showed Friday. Average hourly earnings increased 0.1 percent from the prior month and 2.6 percent from a year earlier, both less than projected. The jobless rate fell to 3.9 percent, the lowest since December 2000, after six months at 4.1 percent.

Treasury yields dipped and the dollar fluctuated following the report. Despite the softer-than-expected wage reading, an unemployment rate drifting further below Federal Reserve officials’ estimates of levels sustainable in the long run may in their view add to upward pressure on wages and inflation. That would keep the central bank on track to raise interest rates in June for the second time this year and once or twice more after that in 2018.

The results may also reinforce forecasts for a rebound in economic growth this quarter after a slowdown in the first three months of the year, with the labor market supporting gains in consumer spending that may be further fueled by tax cuts. Companies in industries from services to manufacturing are hungry for workers, indicating hiring is likely to stay solid.

Read more at Bloomberg.