It's the first Friday of the month, so today's special is the April jobs report served with a side order of the Fed.

April Job Growth Much Lower Than Expected

Here are the highlights of the April jobs report:

• Payrolls rose by 175,000 last month, well below the Dow Jones consensus forecast of 240,000.
• The unemployment rate ticked up to 3.9%, while economists were expecting it to stay at 3.8%.
• Wages rose 0.2% last month and are up 3.9% over the past year. Both those figures were below forecasts.

To sum up: hiring and wage growth are slowing, which is exactly what the Fed wants.

Inflation has been rising faster than expected the past few months, due in part to the strength of the labor market. This report—while coming just one month after 315,000 jobs were added—offers some hope that the tide is turning. And remember that while hiring by itself won’t necessarily stoke inflation, rising wages certainly can.

From May 2023 to March 2024, wages grew faster than prices, but in April they rose at the same pace. It’s also worth noting that the 3.9% increase in wages over the past year is the lowest annual increase since June 2021.

While it may seem wrong to cheer news that the labor market softened last month, it is a breath of fresh air especially after the terrible inflation news we got last week. Also keep in mind that adding 175,000 jobs per month is still a solid number, the unemployment rate has been under 4% since February 2022, and there are still 8.488 million available jobs out there. While those numbers aren’t as good as they used to be, from a historical perspective they’re pretty awesome.

The Fed Leaves Rates Unchanged

To nobody’s surprise, the Fed didn’t touch rates at their meeting this week. They did say two noteworthy things however:

1. They noted a “lack of further progress” in getting inflation down to its 2% target.
2. Chairman Powell said the Fed’s next move is “unlikely” to be a rate hike.

Basically, they are frustrated that inflation is still so high, but still think it will eventually approach 2% without any further rate hikes.

You will notice I haven’t mentioned rate cuts, as I’m sure there won’t be any this year. Sorry about that.