April's Job Report: The Three Numbers That Matter Most

Americans continued to return to work in April despite a decline in GDP in the first quarter of 2022.

According to the Bureau of Labor Statistics (BLS), the nation's businesses and government added 428,000 jobs in April, the same as in March and above market forecasts of 391,000.

Job gains were led by the service sector, benefiting from the opening of the economy, followed by manufacturing and government.

"It's very encouraging that employment numbers have exceeded initial estimates in April. The job market is still very robust," Bill Armstrong, president of recruiting at Safeguard Global, told International Business Times. "We are continuing to see a decrease in unemployment numbers, and job openings are at all-time highs. In addition, we are not hearing any of our clients telling us they are cutting back on hiring efforts.

"Instead, they're telling us they need more people. In this scenario, we would normally expect to see numbers remain fairly consistent throughout the rest of the year as companies continue to add jobs to get back to where they were pre-pandemic. However, with continuing supply chain pressures and rising interest rates, it does bear watching how this will impact future corporate spending."

Cody Harker, senior director of strategy and insights from Bayard Advertising, a recruitment marketing company, sees the April report confirming that the U.S. labor market remains hot.

"The market remains more of a job seeker's market, but with the rise of inflation and the increased cost of living, higher/fairer pay is top of mind for employees," he said. "We are seeing a majority of workers leaving and switching jobs in search of higher wages and better cultural perks in order to keep up with inflation. Even though people are being asked to return to the office, employees and job seekers are very keen on having remote work options. The data is showing that remote work now accounts for over 3% of all job postings."

But the red-hot labor market may not last, as the decline in GDP reported in the first quarter will eventually catch up with the labor market, translating into a slower demand for labor and lower employment. That may not be a bad thing as it will help ease pressures in the job market and help bring inflation down.

Economists have been paying attention to three things to determine whether the labor market is cooling off, easing inflationary pressures.

One of them is the unemployment rate, which came in at 3.6%, the same as in March and slightly higher than the market had expected. This means the labor market isn't getting tighter, easing wage and inflationary pressures.

Another number is labor force participation, the percentage of the economically active population available for work — a proxy for the labor supply. That number came in at 62.2%, down from 62.4% in March, meaning that the labor supply declined as the economy created more jobs, indicating additional wage pressures in the future.

Average hourly earnings in the private sector rose 5.5% in April, down from 5.6% in March. That number was in line with market expectations, meaning wage growth is tapering off.

Expect employers to stay in tune with their employees' needs and wants — workplace satisfaction must remain high to keep employees from jumping ship and exploring alternate opportunities.

"Overarching employee value trends include wages that are in line with market expectations, mental health and wellness benefits, fertility assistance, parental leave, flexible work hours and a hybrid working arrangement," Harker said. "Companies will find that they are able to retain their current employees, but also stand out as a competitive employer."