The Wall Street Journal reports that while the new jobs reported for April were 31,000 shy of the 195,000 forecasted, the unemployment rate is at a 3.9 %.
According to the Journal, the pace of hiring is beginning to slow after the “longest stretch of uninterrupted job growth” in recorded history. Some economists say that the pace of hiring will continue to slow as the labor market fills and employers grapple with finding new workers.
April wages rose by 2.6% compared to a year ago, but is lower than economist expected given the demand. In spite of the higher job demand, it is likely that employers are remaining cautious following many years of economic devastation during the last decade.
Scott Brown, chief economist for Raymond James, calls the sluggish wage increase a “bit of a puzzle”. He speculated that one reason may be the positive news of the decline in unions over the last few decades, which allows the market determine wages more accurately, based on actual work performed.
Brown also pondered that some employers are offering financial perks such as bonuses in place of raising annual compensation. However, another possible contributor to this unexplained phenomenon is the onslaught of contract work by companies like Uber and field services groups.
According to other economists, the slow wage growth, while being seen as a negative by some, will have little impact on inflation rates.
The general consensus among economists is that the unemployment rate will fall to 3.5% over the next few quarters. If this happens, it will be the lowest since the 1960s. In addition, if this continues, the Fed will have plenty of reason to continue to raise interest rates.