WASHINGTON, May 3 - U.S. job growth slowed more than expected in April and the increase in annual wages fell below 4.0% for the first time in nearly three years, but it is probably too early to expect that the Federal Reserve will start cutting interest rates before September as the labor market remains fairly tight.
"A cooler pace of hiring to a more sustainable pace should be interpreted as beneficial with respect to the inflation outlook going forward and remove any lingering concerns of a wage price spiral and put to bed loose and undisciplined talk from the corners of the trading community about stagflation," said Joe Brusuelas, chief economist at RSM.
Social assistance payrolls increased by 31,000 jobs. Employment in the transportation and warehousing industry rose by 22,000 jobs, driven by couriers and messengers as well as hiring at warehousing and storage facilities. "We're sticking with our call for a first ease in July," said Michael Feroli, chief U.S. economist at JPMorgan."The market is not there, but we believe that if the next two job reports show continued cooling in labor market activity, then the Fed will be comfortable taking back some of its policy restraint."
Wage growth in a 3.0%-3.5% range is seen as consistent with the Fed's 2% inflation target. Economists also believed a calendar quirk had biased wages lower. About 87,000 people entered the labor force in April, but there were not enough jobs for many, with household employment rising by only 25,000, accounting for the uptick in the jobless rate. Economists attributed the divergence in employment to the household survey's difficulties measuring the recent immigrants.
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