Total nonfarm payroll employment increased by 160,000 in April as market growth started to slow down, raising questions about the next Federal Open Market Committee Meeting, the U.S. Bureau of Labor Statistics reported on Friday. This is down from March’s growth of 215,000 jobs.
The unemployment rate once ahead held steady at 5%, while the number of unemployed persons was also little changed at 7.9 million. Both measures have shown little movement since August.
"Slow growth and low productivity weighed down April job creation. In addition, layoffs in 2016 are the highest they’ve been in seven years. Over this period the economy has also seen growth in temporary jobs and contracting relative to permanent positions,” said Nela Richardson, Redfin’s chief economist.
"The upshot is that the U.S. is still adding jobs but people are now more at risk of losing them. This blunt fact is likely to hold off the Fed from increasing rates in June," Richardson added,” said Richardson.
Just as many predicted, the Federal Open Market Committee, the group that sets the benchmark interest rate for bank lending, elected last to hold steady and not increase federal funds rate.
The current rate is set at between 0.25% and 0.5%, and will remain so, until at least the FOMC’s next meeting in June.
In the Fed’s announcement, it said labor market conditions have “improved further” since the FOMC’s last meeting, but “growth in economic activity appears to have slowed.”
However, with the new jobs report at play, Doug Duncan, chief economist with Fannie Mae, posted similar concerns to Richardson and said, “While the report may or may not be the start of a weakening trend in the labor market, it supports our expectation that the Fed will not hike in June.”
Talk surrounding the FOMC’s June meeting isn’t unanimous though. National Association of Federal Credit Unions Chief Economist Curt Long said, “This report will have little bearing on the Fed’s next rate hike decision in June, as policy makers have made it clear that threats abroad are of greater concern that the domestic economy.”
In December, the FOMC announced an increase of the federal funds rate, which was the first rate hike since June 2006. In the wake of that announcement, some analysts believed that there would be as many as three more rate hikes in 2016.