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U.S. employers added more jobs than expected in April

SACHA PFEIFFER, HOST:

We got surprisingly good news today about the US job market. Despite rising interest rates and turmoil in the banking system, U.S. employers kept on hiring last month. The economy added more than a quarter million jobs in April, and the unemployment rate matched its lowest level in 54 years. NPR's Scott Horsley joins us now. Hi, Scott.

SCOTT HORSLEY, BYLINE: Hi, Sacha.

PFEIFFER: Scott, with all the challenges the economy is facing right now, a lot of forecasters had expected to see to see slower job growth in April. What happened?

HORSLEY: Yeah, all those headwinds are still out there, but employers just sailed right through them. We saw lots of hiring last month in health care and hospitality. Even construction and manufacturing, which are particularly sensitive to rising interest rates, managed to add jobs in April. As you mentioned, the unemployment rate fell to just 3.4%, tied the - tied with the lowest level since 1969. And the unemployment rate for African Americans fell to 4.7%. That's a record low since the government started tracking it back in 1972. President Biden celebrated all these good numbers at the White House today.

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PRESIDENT JOE BIDEN: The really good news is working-age Americans are participating in the labor force at the highest rate in 15 years - not just since the pandemic, in 15 years.

HORSLEY: Biden's talking there about people in their so-called prime working years between 25 and 54. They've been coming off the sidelines and joining the job market in large numbers. In fact, people in that age group are now more likely to be working or looking work than at any time since 2008. Unfortunately, though, people over 54 and under 25 are not showing that same level of interest. And that's a big reason that the overall job market remains very tight.

PFEIFFER: And when job markets are tight, that often means wages go up because companies are competing for workers. Is that the case here?

HORSLEY: Very much so. Average hourly wages in April were up 4.4% from a year ago. That's a bigger annual increase than the month before. For a while there, it looked as if wage gains might be cooling off, but not anymore. And, of course, workers like getting those bigger paychecks. But Sarah House, who's with - a senior economist at Wells Fargo, says it's not helping the Federal Reserve in its effort to bring down inflation.

SARAH HOUSE: It's great for workers that they're still getting some nice pay gains. But if it's just all going to higher prices, workers don't come out ahead in this situation.

HORSLEY: Of course, the Fed raised interest rates again this week in its effort to bring prices under control. Inflation has eased from its peak last summer, but it's still running well above the Fed's target of 2%. And in order to get back to something like stable prices, we're probably going to have to see somewhat slower wage growth.

PFEIFFER: So April's numbers for jobs were better than expected. Any forecast yet on what to expect in months ahead?

HORSLEY: Yeah, it's hard to know with precision. Obviously, these monthly numbers can bounce around a lot. In fact, the Labor Department made some pretty big downward adjustments today to the February and March jobs numbers based on more complete information. If you step back from the noisy month-to-month variation and just focus on the overall trend, you do see job growth gradually slowing down. And House says that's about what you'd expect.

HOUSE: Hiring can't defy gravity forever, so we're looking for a continued slowdown in job growth. Hopefully, it will continue to decelerate at a pretty measured pace rather than a big swift collapse.

HORSLEY: A gentle, measured slowdown is the soft landing the Federal Reserve hopes to achieve. But there are a couple of big wildcards. One is the uncertainty in the banking system. Other banks are expected to cut back on loans after those three bank failures, and that could make it hard for business to grow. And then there's the uncertainty over the debt ceiling. If that ends badly, we could be looking at a big, swift collapse.

PFEIFFER: That's NPR's Scott Horsley. Thank you.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.