Non-Farm Payrolls Add 164K Jobs, Unemployment Rate At 3.9%

Wage pressures may not be going up right now, but given the solid pace of job growth and the dwindling labor force, they may be appearing soon. Nonfarm payrolls rose 164,000 in April which is on the low side of expectations but revisions, at a net 30,000 gain in March and February, help make up the difference. Payroll growth includes a solid and slightly better-than-expected 24,000 gain in manufacturing with construction up 17,000, mining up 8,000, and professional business services up a sizable 54,000.

But the gains are drying up the available workforce with the number of unemployed falling 239,000 to 6.346 million. This is reflected in the unemployment rate which fell 2 tenths and is now below 4 percent at 3.9 percent. These are tight labor conditions, underscored by the Federal Reserve's forecasts where 3.8 percent is the median for the year.

What's not happening apparently is that employers are not having to pay more to attract workers. Average hourly earnings inched only 0.1 percent higher on the month to 2.6 percent on the year, which are both below expectations. And revisions to March nail home the point, down one notch for both the monthly and yearly rates. How long can this go on is the ongoing riddle of this expansion.

Right now, however, the mix is a good one: inflation-free expansion of the labor market. Other data include a downtick in the labor participation rate, to a lower-than-expected 62.8 percent to further highlight tight conditions, and also a noticeable pickup in manufacturing hours which, together with the gain in manufacturing payrolls, points to increasing acceleration for the factory sector.