The new April jobs report had excellent numbers the encouraged analysts, but there is still one big worry on their minds.
U.S. unemployment has fallen to its lowest level in seven years — the lowest since the Great Recession struck in 2008.
After a disappointing March jobs report, the Labor Department reported much better figures for April, showing a 223,000 increase in payrolls after just 85,000 were added in March, according to a Bloomberg report.
The March increase worried investors because it was the smallest since June 2012, but the April report was reassuring as it showed the recovery was back on track. As a result, the jobless rate dipped to 5.4 percent, the lowest level since May 2008.
The encouraging news caused stocks and bonds to rally. The only problem is wages: despite the growth in jobs, there hasn’t been the corresponding increasing in wages that economists have been expected, which has caused some underlying worries about the economy’s true strength.
As a result, despite the encouraging figures, the Federal Reserve is not expected to raise interest rates at its upcoming meeting in June, and will likely push those up later this year in order to give the economy more time to recovery before attempting to reign in inflation. Interest rates have been at zero since the recession began seven years ago.
Wage growth has been accelerating — just not at the pace of everything else. It has been a gradual growth that has been surprising to investors in a market with unemployment at 5.4 percent. However, economists are still hopeful that the wage growth will come as all the other factors move into place.
