Key takeaways

  • Non-farm payroll employment jumped by 253,000 in April 2023, well ahead of expectations and above March’s downwardly revised gains of 165,000 jobs.
  • The unemployment rate ticked down to 3.4% in April from 3.5% in March, while the labor force participation rate and employment-population ratio remained unchanged.
  • The jobs report came just days after the Federal Reserve’s tenth consecutive rate hike, with persistent labor market strength calling into question whether the Fed will hit the brakes on its tightening cycle.

Contributors

Elana Dure

Vice President, Head of Content Studio

 

The Bureau of Labor Statistics (BLS) jobs report for April 2023 revealed that U.S. non-farm payrolls increased 253,000 during the month. While the gains came in below the average of 290,000 jobs added over the prior six months, the increase of more than a quarter million jobs in April was ahead of economists’ forecasts and a jump from March’s downwardly revised jobs growth of 165,000, suggesting that the labor market remains strong. The unemployment rate of 3.4% in April marked a minimal dip from the 3.5% reported in March.1

Global Investment Strategist for J.P. Morgan’s Private Bank, Shawn L. Snyder, said that the jobs report was relatively positive given the direction interest rates have headed recently.

“The headline figure was quite good given how restrictive interest rates have become with the economy adding 253,000 jobs in April,” said Snyder. “Though it should be taken with a grain of salt as the two prior months were revised down by a net 149,000 jobs.”

The upside surprise in added jobs came just days after the Federal Reserve raised interest rates by 25 basis points, its tenth consecutive rate increase in a prolonged battle to tame inflation.2 Although Chair Jerome Powell suggested that the Fed could be nearing the end of its tightening cycle,3 April’s strong jobs growth raises questions about the potential for a reprieve in rate hikes.

Snyder noted how the strong labor market suggests a resilient economy despite the Fed’s attempt to cool the economy.

“The strong labor market is good news for workers, but it is mixed news for a Federal Reserve that is trying to get the economy to cool,” said Snyder. “We also saw an uptick in new orders in the services sector in April, which suggests that the economy is remaining stubbornly resilient.”

Looking at the details

Employment growth picked up steam in professional and business services, with gains of 43,000 jobs in April exceeding the monthly average of 25,000 jobs added in October through March. Strength in professional, scientific and technical services helped offset continued declines in temporary help services.

Other sectors seeing notable jobs gains in April included health care, which added 40,000 jobs, and leisure and hospitality, whose increase of 31,000 positions was driven largely by growth in food services and drinking places. However, the upticks in both these industries marked slowdowns from the average gains reported over the previous six months. Employment in leisure and hospitality remains 2.4% below the pre-pandemic level reported in February 2020.

The situation was similar for government employment – which remains 1.3% below its pre-pandemic level – with 23,000 jobs added in April 2023 coming in below the average of 52,000 over the prior six months. Social assistance and financial activities saw April jobs gains of 25,000 and 23,000, respectively, while employment in mining, quarrying and oil and gas extraction rose by 6,000, with gains concentrated in mining support activities.

Other key industries such as construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, and information saw minimal changes in their employment numbers during the month of April.

April’s labor force participation rate of 62.6% and employment-population ratio of 60.4% were unchanged from the levels reported in March. These indicators remain below their pre-pandemic levels of 63.3% and 61.1%, respectively. A lower labor force participation rate could indicate that employers need to improve incentives to fill open positions, suggesting potential upward pressure on wages.

The jobs report for April also showed minimal changes to the overall unemployment picture, with an unemployment rate of 3.4% and the number of unemployed persons at 5.7 million marking minor downticks from the levels reported in March. Unemployment rates among major demographic groups also remained relatively stable in April.

Although the addition of 253,000 jobs in April exceeded expectations, the report also included downward revisions of 78,000 and 71,000, respectively, to the non-farm payroll numbers reported in February and March. The BLS revises data from reports released in previous months based on additional information it receives from businesses and government agencies as well as a reevaluation of seasonal impacts.

“Given the backdrop, the jobs report can no longer be viewed in isolation. It has to be viewed in tandem with inflation, which we will get a read on next Wednesday,” added Snyder. “If the labor market stays strong while inflation continues to fall, that’s good news and supports the soft-landing narrative.”

“On the other hand, if inflation stays elevated, then a resilient labor market may put additional Fed rate hikes back on the table and increase the odds of a hard landing down the road,” said Snyder.

References

1.

Bureau of Labor Statistics. “The Employment Situation – April 2023.”

2.

Board of Governors of the Federal Reserve System. “Implementation Note Issued May 3, 2023.”

3.

Board of Governors of the Federal Reserve System. “Transcript of Chair Powell’s Press Conference, May 3, 2023.”

IMPORTANT INFORMATION

This material is for informational purposes only, and may inform you of certain products and services offered by J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at accessibility.support@jpmorgan.com for assistance. Please read all Important Information.

GENERAL RISKS & CONSIDERATIONSAny views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan representative.

NON-RELIANCECertain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.

Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.

Legal Entity and Regulatory Information.

J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

Bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.

This document may provide information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (“JPMS”). The agreements entered into with JPMS, and corresponding disclosures provided with respect to the different products and services provided by JPMS (including our Form ADV disclosure brochure, if and when applicable), contain important information about the capacity in which we will be acting. You should read them all carefully. We encourage clients to speak to their JPMS representative regarding the nature of the products and services and to ask any questions they may have about the difference between brokerage and investment advisory services, including the obligation to disclose conflicts of interests and to act in the best interests of our clients.

J.P. Morgan may hold a position for itself or our other clients which may not be consistent with the information, opinions, estimates, investment strategies or views expressed in this document.  JPMorgan Chase & Co. or its affiliates may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as an underwriter, placement agent, advisor or lender to such issuer.

© 2023 JPMorgan Chase & Co. All rights reserved