The economy was expected to have added 400,000 jobs in April in a tight labor market, but economists say the number of new payrolls could soon start to slow.
April's employment report is expected to show another month of strong job gains of about 400,000 and wage growth of 5.5% on a year over year basis.
The economy is expected to have added another 400,000 jobs in April, reflecting a very tight labor market, but economists say the number of new hires could start to slow from here. According to Dow Jones, the unemployment rate is expected to fall to 3.5% in April, down from 3.6% in March. The April employment report is released at 8:30 a.m. ET Friday.
In a turbulent financial market focused on the pace of inflation, the wage component of the report is likely to be the most important factor.that unit labor costs jumped 11.6% in the first quarter as productivity slumped. That reflects a 3.2% increase in hourly compensation on top of a 7.2% drop in productivity and was the largest four-quarter increase in unit labor costs since 1982. The productivity decline was the steepest in 75 years.
If that were to happen, that's when you get the "dreaded wage price spiral," said Zandi. At that point, the Federal Reserve would have to get even more aggressive with its rate hikes. "You want a more balanced situation where wages are outpacing inflation because workers are more productive, but that's not where we're at today," said Swonk. "Where we're at today is eroding living standards and that's important.""That's why the Fed has put the labor market in their crosshairs and talked about reducing demand, but it's hard to see how we get from 1.9 to 1.2 job openings per worker," said Swonk.
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