No Stag or Flation in Today’s Jobs Report
No Stag or Flation in Today’s Jobs Report
No Stag or Flation in Today’s Jobs Report
After what looked like a reacceleration in the first quarter, today’s Jobs Report shows the labor market returning to its prior trend of gradually normalizing job growth and wage growth.
After first-quarter GDP growth missed expectations, and inflation exceeded expectations, some economists warned of stagflation—that is, slowing growth paired with accelerating inflation. Rather than stagflation, however, today’s jobs report shows solid payroll gains (+175K, about 10K more than the 2019 monthly average) and cooling wage growth (3.9% YoY, down 0.2 pt)—exactly the news markets and the Fed were hoping for. The overall picture is one of a steady labor market with disinflationary growth.
Here are some key facts about recent labor market performance:
Job growth has been steady for nearly two years.
Measured payroll gains fluctuate from month to month largely due to statistical noise. Those fluctuations are then often amplified in the media. When one zooms out on a graph, however, it is clear that job growth has been roughly steady since August of 2022, averaging about 250K a month. That is well above the 2015-2019 average of 190K and a sign of a robust labor market.
Healthcare has been the major engine of steady job growth.
The healthcare sector added 56K jobs in April, bringing its average monthly payroll gain to 63K over the past year. That is more than double the 2015-2019 average of 26.5K. As a result, there are now 765K more U.S. workers employed in healthcare than a year ago. The healthcare sector is projected to add more jobs than any other over the next decade. Healthcare roles are also among those seen as least likely to be eliminated due to automation. In other words, there is good reason to believe that healthcare job gains will continue at this pace for the foreseeable future.
More working-age Americans are employed than at any time since 2001, and more working-age women than ever before in U.S. history.
The employment-population ratio for workers aged 25-54 rose to 80.8% in April, with the rate for women hitting a new all-time high of 75.5%. The increased participation of women, including mothers, is a major driver of recent gains in voluntary part-time employment. It has also likely contributed to strength in household spending.
Unemployment has now been at or below 4.0% for 29 straight months, the longest such period since the 1960s.
The unemployment rate ticked upwards to 3.9% in April, and it has trended upwards since bottoming at 3.4% last April, but it remains historically low. Unemployment rates below 4% are associated with tight labor markets where employers feel pressure to raise wages and improve working conditions, and those improvements draw more workers in off the sidelines. There was a worrying spike in the unemployment rate for black Americans to 6.4% last month, but that has since reversed. Black workers are often referred to as canaries in the coal mine, the first to lose jobs with the economy weakens. This month’s report suggests that the spike last month was statistical noise rather than a sign of impending labor market deterioration.
Take a tour through the Jobs report in ZipRecruiter charts.
