U.S. labor market continues to be strong in April, jobless rate falls to lowest in nearly 50 years

The U.S. economy added 263k new jobs in April, much above analysts’ expectations of a rise of 190k. The jobless rate dropped to 3.6 percent, the lowest in nearly 50 years. Strength was fairly widespread, with hiring accelerating for both good and services. Professional and business services, construction and health care all saw marked gains. The retail sector remained weak, shedding 12k jobs in April. Employment in the sector dropped 0.3 percent year-on-year.

The labor force participation rate continued to fall, and is now at 62.8 percent. The civilian labor force has been falling steadily since the start of 2019, and is consistent with its year ago level. Somewhat discouraging was a further fall in the participation rate for prime aged Americans, which dipped to 82.2 percent in April. Nevertheless, this measure continued to be above its year-ago level. Growth in average hourly earnings was modest, rising 0.2 percent in April. This left wage gains stable at 3.2 percent on a year-on-year basis.

The U.S. labor market again defied expectations for weaker hiring tallies and further hiked the bar for Fed rate cuts, said TD Economics in a research report. Wage growth did not rise in April, but it seems pretty good at 3.2 percent. With weaker inflation, it is even better in real terms, giving a strong base for a recovery in consumer spending in the second quarter.

"We still expect hiring will slow over the course of 2019. Economic growth is slowing from its 3 percent pace over the past year and is likely to average around 2 percent over the remainder of this year. With the unemployment near a record low, supply constraints will begin to bind. This will mean more muted monthly payroll gains, consistent with a mature phase of the economic cycle. We expect job gains to slow below 150k per month through the remainder of 2019”, added TD Economics.

At 14:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -21.0582 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex