In April, the United States economy added the least number of jobs in seven months, and Americans fallen out of the labor force in droves, indications of weakness that increases doubts on whether the Federal Reserve will hike interest rates before the end of 2016. Nonfarm payrolls increased by 160,000 jobs last month as construction employment inched higher and the retail sector cut jobs, the Labor Department noted on Friday. That was the smallest increase since September and below the first-quarter median job growth of 200,000.
Contributing to the report’s feeble sentiment, employers added 19,000 less jobs in February and March than previously reported. While the unemployment rate held stead at 5% because people dropped out of the work force. “For those who had thought a June rate hike was in play, this was a nail in the coffin. This raises questions about a September rate hike. I would like to think the economy is in a better place at the end of the year,” said Phil Orlando, chief equity market strategist at Federated Investors.
The downturn in job gains could ignite expectations of a strong rally in economic activity in the second quarter after growth almost halted in the first three months of the year. Economists polled by had forecast payrolls increasing 202,000 last months and the jobless rate unchanged at 5 percent. Next, the dollar fell to sessions lows versus the euro and the yen after the report. Prices for U.S. government debt increased, while U.S. stocks index futures dropped marginally. Median hourly earnings were the only optimistic light in the employment report, advancing eight cents or 0.3 percent last month. Lastly, that took the year-on-year hike to 2.5% from 2.3% in March, still under the 3.0% increase that economists say is required for inflation to increase the Fed’s 2.0% target.