“We’ve continued to add jobs routinely every month for so long, and the unemployment rate we have reached is amazing,” said Catherine Barrera, chief economist of the online job site ZipRecruiter. “This is the economy doing well.”
But the future has become clouded as President Trump continues to flirt with a trade war. The White House has offered little clarity about whether its newly imposed steel and aluminum tariffs will extend to allies like Mexico, Canada and the European Union, and it seems no closer to smoothing over economic tensions with China.
It is unlikely that Friday’s report will illuminate whether those moves will affect blue-collar hiring. Economists said it was too soon to tell how employers may change their staffing or expansion plans in response to the tariffs on Chinese goods, or to Beijing’s retaliation. But there are signs that companies that buy metals are feeling the effects already. The Institute for Supply Management said this week that manufacturing activity grew in April at its slowest pace since last July.
Uncertainty over the price of raw materials could prompt factories to cut back from their recent hiring spree. Manufacturers added 74,000 jobs in the first quarter, much more than in the same period last year.
April (Money) Showers?
The center of attention in Friday’s report will be your paycheck. Specifically, economists on Wall Street and policymakers in Washington are keen to see whether April will offer clearer evidence that wages are growing faster. The 2.7 percent year-over-year growth in hourly earnings in March was solid, but not spectacular.
Economists expect that low unemployment will lead to increasingly big pay bumps for workers as employers fight over a dwindling number of candidates. But this recovery has so far bucked that conventional wisdom. The change in hourly earnings varied from month to month last year, but hovered around 2.5 percent, barely keeping up with inflation.
If wage growth creeps toward 3 percent, it could signal a sea change, economists said. It could also prompt the Federal Reserve to raise its benchmark interest rate more aggressively than it has signaled.
“Wage growth picking up would suggest the labor market is tightening and that the Fed could have to move more aggressively,” said Matthew Luzzetti, a senior economist at Deutsche Bank. Projections released at a Fed meeting this week suggested that officials were leaning toward a total of three rate increases this year. But strong wage growth could fan fears of an uptick in inflation, pushing them toward a fourth increase, Mr. Luzzetti said. “It means borrowing costs will be moving higher for typical consumers.”
Who’s Been Left Out
The good times have been better for some than for others. Some Americans are still hesitating to enter the job market, perhaps bruised from the particularly harsh recession a decade ago.
“We have realized that there were even more workers on the sidelines than we previously thought,” said Martha Gimbel, an economist at Indeed.com, a job-search site. She pointed to data showing that more people are working part time, or have been unemployed for a long stretch, than in the last expansion. Ms. Gimbel said that her site had seen an increase in people searching for things like “background check” and “full time,” which could indicate that the economy’s strength is coaxing more people into the working world.
But for some groups, the market has been tougher. The unemployment rate for black workers, for example, has consistently hovered well above the rate for white workers, even as employers complain loudly about a labor shortage in sectors like construction and trucking. The job market has improved for black workers in recent years, but they still faced a jobless rate of 6.9 percent in April, compared with 3.6 percent for white workers.
“If that number were reversed — if black unemployment was under 4 percent and white unemployment was 6.9 percent — the country would be up in arms,” said Andre Perry of the Brookings Institution, whose research focuses on race and structural inequality. Differences in education or degrees don’t explain that gaping disparity, according to federal data.
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