Non-farm payrolls: Dollar strengthens as US jobs grow at slower-than-expected rate

Non-farm payrolls: Dollar strengthens as US jobs grow at slower-than-expected rate

US job growth increased less than expected last month, as the unemployment rate fell to more than a 17 year low of 3.9 per cent as some jobless Americans left the workforce.

Non-farm payrolls published this afternoon revealed that the US economy added 164,000 jobs in April, less than the 193,000 expected. The data pushed the dollar up against the pound and euro.

It had been hoped that greater gains would be made after disappointing figures showed a huge drop in March to the – newly revised – figure of 135,000 jobs, well below February’s 313,000.

Unemployment, which analysts had tipped to fall four per cent, broke a six-month streak of the unemployment rate sitting at 4.1 per cent.

Wage gains were 0.1 per cent more than the prior month and 2.6 per cent higher year-on-year – lower than the 0.2 per cent and 2.7 per cent forecasts.

Job growth is moderating as the labour market nears full employment, with reports of construction and manufacturing firms struggling to find qualified workers.

Economists expect the unemployment rate will drop to 3.5 percent by the end of the year. The economy needs to create roughly 120,000 jobs per month to keep up with growth in the working-age population.

In total 236,000 people dropped out of the workforce.

James Ingram, investment manager at MB Capital, added: “April was another miss, but not a massive one and with the upward revision to March’s anaemic figure, the impact on the US economy has effectively netted itself out.

“But of far greater concern is the underlying cause for the slowing rate in job creation – the US labour market is now stretched tight as a drum… Even the most hawkish will now be thinking twice about the prospect of three more rate hikes this year.

“The April miss may be good news for stocks, as it signals lower inflation, but overall this contradictory data could trigger trades in all directions.”

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