When CFOs and small business owners say they still face “critical hiring needs” in 2023, they mean it.
The U.S. government’s data on payrolls, hourly earnings, and unemployment for April showed an unexpectedly robust jobs market little hampered by efforts to quell inflation or indicative of an imminent recession.
For CFOs, filling positions may still be difficult in the months ahead, and labor costs will stay elevated in the near term.
According to the data released by the Bureau of Labor Statistics on Friday morning, jobs added to U.S. payrolls bounced back to 253,000 last month, well above economist’s expectations of 185,000.
Health and education jobs led the April increase, followed by hiring in leisure and hospitality.
As BofA Securities Global Research pointed out, however, the BLS slashed 149,000 jobs off job adds for the prior two months, making the three-month average payroll growth 222,000, suggesting some moderation in hiring activity.
The U.S. unemployment rate dropped to 3.4%, a multi-decade low. Interest-rate hikes by the Federal Open Market Committee have done little to soften labor demand, which means there has been no rebalancing of the labor market since March 2022, when the FOMC started its monetary tightening cycle.
“It’s difficult to argue that the labor market cooled,” said BofA global research in its commentary on the April data. “The report reinforces upside risks to the near-term monetary policy path.”
The labor market’s resilience doesn’t help the FOMC’s goal of lowering price inflation. Average hourly earnings increased 0.5% for April, which pushed the year-over-year increase to 4.4%.
The March U.S. Compensation Planning Survey by Mercer found that U.S. employers reported 2023 annual merit increases averaged 3.8%, while total compensation increased by 4.1%. Both numbers were increases over 2022 totals.
Perhaps Seema Shah, chief global strategist at Principal Asset Management, had the best take on the April jobs data. She told Bloomberg: “Markets have been hoping for slower economic data, in the hope that it will give the Fed space to cut rates. Today’s jobs report has delivered the exact opposite.”
