US Labour Market Defies Rate Hikes, Posts Strong Job Gains

• U.S. job growth accelerated in April accompanied by solid wage gains, indicating persistent labour market strength that could compel the Federal Reserve to keep interest rates higher for longer as it fights to bring inflation under control.
• The Labour Department's closely watched employment report on Friday also showed the unemployment rate falling back to a 53-year low of 3.4%. Though data for February and March were observed to be sharply lower, the labour market is slowing only marginally. It suggested there was no impact yet on the economy from tighter credit conditions, which together with the Fed's punitive rate hikes have raised the risk of a recession.
• "Interest rates are going to have to remain elevated," said Sean Snaith, director of the University of Central Florida's Institute for Economic Forecasting. "This kind of strength in the labour market makes it more difficult for the Fed to continue its reduction in inflation."
• Nonfarm payrolls rose by 253,000 jobs last month, but the economy created 149,000 fewer jobs in February and March than previously reported. Job growth has averaged 290,000 jobs per month over the prior six months. Economists polled by Reuters had forecast payrolls would rise by 180,000. The larger-than-expected increase in payrolls could be hinting at some spring revival in the economy after activity slowed in February and March.

 (Source: Reuters)