Chart of the Week: Monthly Payroll Growth and Unemployment Rates

Source: Bureau of Labor Statistics

Based on April’s employment report from the Bureau of Labor Statistics, there was some positive news on the job market for April, with the unemployment rate steady at 4.3%, employment growth at a solid 115,000, and wage growth picking up to 3.6% at an annual rate.

However, the three-month trend is not quite as strong, with job growth averaging only 48,000, including the net downward revisions to the job counts for the prior two months. Job growth continues to be concentrated in just a few sectors, including health care, social assistance, retail trade, and transportation. 

The report also showed other metrics painting a different picture. The labor force participation rate has declined for the fifth consecutive month, from 62.6% to 61.8%, and is now at the lowest rate since 2021. The labor force, the total number of people either employed or actively looking for work and counted as unemployed, has declined by 1.5 million since the beginning of the year. And the number of people employed has declined by more than 1.2 million over a similar period. The U-6 measure of underemployment, now at 8.2%, captures some of this shift in individuals leaving the labor force. Additionally, the number of workers who are working part-time for economic reasons is the highest since December 2025.

All in, the job market is holding together reasonably well, but it is not as strong as the April headline would suggest. The implications are that there is not enough job market weakness to change the direction of Fed policy. MBA expects that the Fed will hold off on rate cuts for the foreseeable future, given the upside risk to inflation as the conflict in the Middle East remains unresolved, and there is enough concern about the labor market to keep at least some potential homebuyers hesitant about their own job situation.