- Gregory Daco, head of U.S. macroeconomics
US job growth rebounded last month after a steep setback in March, adding to signs of a pick up in economic momentum. Nonfarm payrolls rose a seasonally adjusted 223,000 in April, following a revised 85,000 increase in March, down from a previously reported 126,000, according to the Labor Department. Private payrolls were the main contributor to the gain, rising by 213,000, while the government added 10,000 jobs. Consequently, the US unemployment rate declined to 5.4% in April, down from 5.5% a month earlier. The latest data confirmed positive developments. The labour force grew as more Americans entered the job market, and the number of Americans finding work increased. The jobless rate is moving closer to the Federal Reserve's expectation of "full" employment, with unemployment rate between 5% and 5.2%. Wage growth also pointed to a rebound in the world's number one economy. Average hourly earnings rose 2.2% from a year ago.
Despite positive labour market data the Fed is likely to refrain from tightening monetary policy for at least a few more months due to the headwinds to growth from the US Dollar as well as spending cuts in the energy sector, and a willingness among policy makers to get a clear view on the economy's trajectory. The economy expanded by annualized 0.2% in the first quarter, but a report showing a wider-than-forecast trade deficit suggests GDP actually shrank.
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