Two months of war in Iran wasn’t enough to slow down hiring in the U.S. as employers nearly doubled Wall Street‘s jobs expectations in April.
Both the federal Bureau of Labor Statistics Jobs report and the ADP National Employment Report for April showed an economy that, at least on the surface, is surprisingly resilient in the face of rising fuel costs ahead of the summer season. Fuel consumption is at its highest in these warmer months, when Americans drive on average about 5 more miles daily than during the winter months, AAA notes.
High gasoline prices were expected to have a ripple effect across the economy, including employment, but instead the economy added 115,000 jobs, according to the BLS, well ahead of the 65,000 expected by analysts in a Bloomberg poll, Yahoo Finance reported.
Meanwhile, ADP‘s report, which excludes the federal workforce, showed employment increased by 109,000 jobs, with small-business employees leading the way in job gains.
“At a high level, the April U.S. jobs report was solid, showing a steady unemployment rate and a clear nonfarm payrolls beat at 115k — enough, we believe, to keep the Fed comfortably on hold. The details were more mixed,” Andrew Husby, senior economist at BNP Paribas Securities, said in a note emailed to TheStreet.
April BLS report flashes worrying signal on wages
While the top-line results were well ahead of expectations, the April BLS jobs report also showed some troubling signs, according to BNP Paribas, despite the firm’s bullish outlook for employment.
Average hourly earnings grew 0.2% month over month, missing the firm’s above-consensus estimate by 0.2%, the BNP Paribas note indicated.
Related: Bank of America data show concerning gas affordability trends
“The soft AHE figure could eventually challenge our views on overall labor slack and resulting inflation in non-shelter services, if softness persists,” Husby said.
“While we see the data as supporting the idea that wage-price feedback is minimal at current levels, particularly with productivity running at a solid clip, we suspect that the causality risks running in the other direction — from prices to wages. With inflation set to move higher in the coming months, a fresh bout of price gains risks leaking back to wage inflation, particularly if the unemployment rate were to move below 4%.”
Still, the firm is bullish on the near-term employment picture as it expects artificial intelligence to result in net employment gains.
“Beneath the surface, our work on the economic impacts of artificial intelligence posits that the technology’s net effect on the job market will be to lower the unemployment rate over the near term rather than raise it, as some fear. Key to our framework is the idea that job displacement in AI-exposed industries will likely be offset by increased labor demand in other areas, amid forward-looking optimism and the investment buildout,” Husby said in the note.
U.S. job market remains strong, but becoming more “selective,” analyst says
April’s jobs numbers are a good sign for an economy that has to show resilience amid a war in the Middle East that could turn hot or cold on President Donald Trump’s whim.
Gas prices are about 50% higher than before the Iran war started, according to PBS. And despite oil prices falling as U.S. warships escort cargo ships through the Strait of Hormuz, U.S. gas prices are expected to remain elevated for some time, NBC News reported.
While the April jobs numbers didn’t reflect that stress through lower employment, researchers at global staffing and advisory firm The Planet Group (TPG) did notice some other warning signs.
“The market isn’t slowing as much as it’s becoming more selective. We’re seeing fewer roles open, but stronger retention and more targeted hiring. The bottom line is, companies are prioritizing impact over volume,” Christine Belmonte, president of technology staffing for TPG, told TheStreet.
“Job flow and interviews are down year-over-year, but consultants are staying on longer. That tells you employers are holding onto talent they trust while being more deliberate about adding new roles.”
Jeff Bonci, president of accounting and finance for TPG, in comments emailed to The Street, identified three themes that stood out from the April report.
- Employers are still hiring, but they’re being more selective, tightening budgets and adding more approval layers.
- Decision-making has slowed in some cases.
- HR is still a large part of the job market, with about 20% of jobs being in human resources.
- Most of the hiring activity is coming from manufacturing, utilities, professional services and higher education.
“In energy, utilities, and engineering, demand continues to hold up relatively well. Hiring is largely tied to infrastructure investment, capital projects, and critical operations, which is creating that stability even as broader white-collar hiring remains flat,” Jim Pagliero, TPG’s president of energy, engineering, and manufacturing, told TheStreet.
“At the same time, the market is very targeted where companies are prioritizing specialized engineering and technical roles, while more discretionary and back-office hiring remains soft.“
Related: Strong April ADP jobs report hides major shift in U.S. employment
