The nation's unemployment rate dropped to its lowest level in more than 30 years in April and wages pushed higher, even as employers' pace of hiring slowed from its strong March clip, the
The U.S. unemployment rate, a statistic that is closely watched by the financial markets and the
for signs of inflation, dropped to 3.9% in April, its lowest level since January 1970, while non-farm payrolls rose a seasonally adjusted 340,000 in April after rising at an upwardly revised 458,000 pace in March. Those numbers were in part increased by government hiring of temporary census workers, which accounted for about 73,000 of those jobs.
The average hourly wage of the U.S. worker rose 6 cents, or 0.4%, to $13.64, leading the annual pace of wage increases to rise 3.8%, the largest gain in 10 months.
The rise in payrolls was slightly below a
consensus forecast of economists, which called for a 358,000 increase in payrolls. But the data highlight the intense shortage of workers that the U.S. is experiencing as it storms toward its record 10th year of economic expansion. It also supports anecdotal evidence from around the country seen in the Federal Reserve's so-called
released earlier this week, which found that businesses all over the nation are having a tough time finding and keeping workers.
Economists say that if the economy sustains the hiring momentum seen so far this year, the shortage of workers might intensify.
"So far this year, ex-census, payrolls are up 250,000 a month," said Josh Feinman, chief economist at
Deutsche Asset Management
. "If the economy continues to generate 250,000 on average, the unemployment rate is going to continue to ratchet lower."
And while available workers are getting harder to find, wage growth has started to accelerate. That has worried economists and Federal Reserve officials alike that higher wages could spell inflation as businesses pass the higher cost of workers into the prices of their finished goods.
has repeatedly expressed concern over the decline in the pool of available workers, and the inflationary implications it carries. After remaining largely in check during the last couple of years, wage pressures are beginning to intensify, as evidenced by other gauges such as the Labor's
employment cost index
, which rose 1.4% in the first quarter.
The economy has been able to dodge a significant rise in inflation, largely because of gains in worker productivity. Rising productivity has allowed businesses to increase their output without significant rises in the labor cost per unit of production.
But Greenspan has also warned that the economy is vulnerable to inflation should productivity gains start to wane. A Labor Department productivity
report on Thursday might have signaled that the tables are starting to turn on the anti-inflationary influence of productivity.
While productivity rose a still-strong 2.4% in the first quarter, it was a sharp drop from 6.9% in the fourth quarter, and was accompanied by higher unit labor costs, which rose for the first time in nearly a year at 1.8%. Additionally, consumer prices have started to accelerate. The core
consumer price index
rose 0.4% in March, the largest gain in more than five years.
In an attempt to head off such inflationary pressures, the Fed has raised interest rates five times in 0.25 percentage point increments since last June. In theory, higher interest rates slow economic growth by making it harder for businesses to borrow and spend. But the increases thus far have had little effect in important areas of the economy, such as the job market, stock markets, housing and construction, and manufacturing.
That has led many to surmise that the Fed might step up its efforts to slow growth by increasing the magnitude of its rate increases. A growing number of economists is expecting the Fed to raise interest rates by 0.5 percentage point when it meets May 16, and the strength seen in the labor market from Friday's report might add to their ranks.
Even with the temporary government hiring for the 2000 census, census workers actually were less important to the overall increase in jobs last month than had been expected; excluding census workers, nonfarm payrolls increased a still-strong 267,000, the Labor Department said.
Construction workers fell 55,000, while manufacturing jobs increased 11,000. The overall gain in payrolls showed that labor markets remained extremely tight and job creation continues to be strong. Service-producing jobs added 380,000, including 107,000 in government workers.
The average employee's workweek was 34.6 hours, compared with March's 34.5 hours, indicating that existing workers are putting in more hours to make up for the shortage of new workers.