US job growth rebounded sharply in April and the unemployment rate dropped to a near 10-year low of 4.4 percent, signs of a tightening labor market that could seal the case for an interest rate increase next month despite moderate wage growth.
Nonfarm payrolls jumped by 211,000 jobs last month, the Labor Department said on Friday, well above the monthly average of 185,000 for this year and a jump from the gain of 79,000 in March.
Job gains were driven by a surge in hiring in the leisure and hospitality sector as well as business and professional services.
Fall to 10-year low
The drop of one-tenth of a percentage point in the unemployment rate took it to its lowest level since May 2007. The decline reflected both an increase in hiring and people leaving the labor force.
The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, fell to 62.9 percent from an 11-month high of 63 percent.
The rebound in hiring supports the Federal Reserve's contention that the pedestrian 0.7 percent annualized economic growth pace in the first quarter was likely "transitory," and its optimism that economic activity would expand at a "moderate" pace.
Federal Reserve chair Janet Yellen. The Fed kept rates steady overnight. /CFP Photo
The Fed on Wednesday kept its benchmark overnight interest rate unchanged and said it expected labor market conditions would "strengthen somewhat further."
The US central bank raised its overnight interest rate by a quarter of a percentage point in March and has forecast two more increases this year.
Average hourly earnings rose seven cents, or 0.3 percent, last month, partly because of a calendar quirk. While that lowered the year-on-year increase to 2.5 percent, the lowest since August 2016, there are signs that wage growth is accelerating as labor market slack diminishes.
A government report last week showed private sector wages recorded their biggest gain in 10 years in the first quarter.
(Source: Reuters)
