US job growth slows in April; unemployment rate edges up to 3.9%

US job growth decelerated more than expected in April, accompanied by a cooling in annual wage gains. However, it may be premature to expect interest rate cuts by the Federal Reserve before September, given the ongoing tightness in the labour market.

According to the Labor Department's Bureau of Statistics' closely monitored employment report released on Friday, nonfarm payrolls expanded by 1,75,000 jobs last month. March's data was revised upward, indicating a rise of 3,15,000 jobs compared to the previously reported 3,03,000.

Economists surveyed by Reuters had projected a payroll increase of 2,43,000, with estimates ranging from 1,50,000 to 2,80,000.

Despite the slowdown, the unemployment rate inched up to 3.9 per cent from 3.8 per cent, marking the 27th consecutive month below the 4 per cent threshold.

Wages grew by 3.9 per cent over the 12 months through April, down from a 4.1 per cent rise in March. Wage growth within the range of 3.0 per cent-3.5 per cent is considered consistent with the Fed's 2 per cent inflation target.

In its recent meeting, the Federal Reserve opted to maintain its benchmark overnight interest rate within the current 5.25 per cent-5.50 per cent range, where it has remained since July.

Market expectations still lean towards the central bank initiating an easing cycle in September, although a minority of economists believe this window may be closing. Since March 2022, the Fed has increased its policy rate by 525 basis points.

While the moderation in payrolls may raise concerns about a potential loss of economic momentum in the second quarter, the slowdown in GDP growth in the first quarter was primarily attributed to a surge in imports, reflective of robust domestic demand.

(With Reuters inputs)