U.S. non-farm payroll growth slows to just 175,000 in April

Hiring in the U.S. slowed by noticeably more than expected in April, alongside lower than expected wage growth.

The slowdown was the result of a near stalling in hiring in the country's construction, leisure and public sectors.

Nonetheless, the former two were likely reflecting the retreat in temperatures from the record levels seen during the previous months.

And the latter was likely revert to some degree in coming months thanks to government stimulus.

According to the Department of Labor, in seasonally adjusted terms, non-farm payrolls increased by 175,000 last month.

Economists had penciled-in an increase of 243,000, after March's rise of 315,000.

February and March's tallies for non-farm payrolls were revised down by a combined -22,000.

Hiring in construction slowed from 40,000 in March to 9,000 last month, in Leisure and Hospitality form 53,000 to 5,000, and in government from 72,000 to 8,000.

Staffing at temporary help services registered an outright fall of 16,400.

Average hourly earnings also rose by less than expected last month, increasing by 0.2% over the month (consensus: 0.3%), whilst the length of the average workweek dipped from 34.4 hours to 34.3.

Year-on-year the annual rate of increase in average hourly earnings dipped from 4.1% to 3.9%.

In an immediate reaction, as of 1337 BST the yield on the policy-sensitive two-year Treasury note was off by 12 basis points to 4.76%.

Fed fund futures meanwhile moved to bring forward the anticipated date of the first Fed rate cut from November to September with two cuts now anticipated in 2024, against the just one anticipated before Friday's data.

The unemployment rate meanwhile ticked up by one tenth of a percentage point to 3.9%, as expected.

Labour force participation was unchanged at a rate of 62.7%.

"Overall, risk sentiment has been given a boost this week from a less hawkish Fed and payrolls data that is moving in the direction needed for interest rate cuts in the US," said Kathleen Brooks, research director at XTB.

"The combination of payrolls and the Fed have helped to increase rate cut expectations for 2024, with no chance of a rate hike for this year expected. What a difference a week makes."

On a related note, Mohammed El-Erian wrote in the Financial Times on Friday that Fed chief, Jerome Powell's dovishness was appropriate, albeit not for the reasons that Powell thought.

"Indeed, 2 per cent may not be the right inflation target for an economy going through so many structural changes, both domestically and internationally."

-- More to follow --