April Jobs Report Forecasts Predict Still-Strong Hiring

The April jobs report is forecast to show continued strong job growth, and the Federal Reserve appears poised to keep interest rates higher for longer.

Analysts predict nonfarm payrolls—one of the primary measures of job growth in the US—to show an increase of 233,000 in the April report, down from 303,000 in March. But while such an increase would represent a slowdown, it would still reflect an economy whose strength has defied expectations through the most aggressive interest rate increases in the Fed’s history.

“We’ve had elevated job growth for a while … and if this keeps up, folks will start to wonder if we’re in a restrictive monetary regime at all,” says José Torres, senior economist at Interactive Brokers.

April Jobs Report Forecast Highlights

• Jobs report release date and time: Friday, May 3 at 8:30 a.m. EDT
• Nonfarm payroll employment is forecast to rise 233,000 vs. a 303,000 increase in March, according to FactSet.
• The unemployment rate is forecast to stay steady at 3.8%.
• Hourly earnings are predicted to rise 0.3% on a monthly basis, the same as in March.

Torres predicts that the April payroll rise will be dominated by non-cyclical sectors such as education, government, and healthcare, which he expects to add 150,000 new jobs out of a total of 270,000 (above the consensus estimate). He anticipates leisure and hospitality will lead the cyclical sectors and add 35,000 jobs. Cyclical sectors aren’t displaying “a huge appetite for mass hiring, but [they’re] not showing pressure to lay off [workers] either,” he says.

Economists say strong payroll gains are being fueled by high levels of immigration to the United States. At Goldman Sachs, stepped-up immigration is one factor in the bank’s above-consensus forecast for a 275,000 increase in hiring.

Meanwhile, the unemployment rate is forecast to hold steady at 3.8%, well within the 3.7%-3.9% range seen since August 2023.

Watching Job’s Report Wage Pressures

With inflation concerns remaining at the forefront of investor and Fed concerns, there will be a focus on the wages component of the report. Strong wage gains are sometimes seen as supporting upward pressure on prices. Average hourly earnings are forecast to rise 0.3% in April, the same as in March. That would result in a 4.0% year-over-year rise, down a touch from the 4.1% annual increase in March.

“If [average hourly] earnings decelerate, then inflationary pressures are normalizing, but if it surprises to the upside, that could be interpreted as a sign the labor market is still running hot,” says Bill Adams, chief economist at Comerica Bank.

Economists at JPMorgan are calling for an above-consensus rise in wages, thanks to a California minimum wage increase that kicked in during April. “A law passed last year in California raising the minimum wage for fast-food workers to $20 per hour took effect in April,” they wrote. “We think the passage of this law will mean average hourly earnings rise 0.4% m/m in April for an increase of 4.2% year over year. If so, it could keep markets jittery about firming price pressures.”

Strong Jobs Keeping Fed Rate Cuts On Hold

Robust payroll numbers and higher-than-expected inflation throughout the first quarter point to the Fed keeping interest rates at current levels until later this year.

“The Fed looks most likely to reduce interest rates after the summer months. Our forecast is for the first cut in September, and we expect the Fed to gradually cut rates into 2025. While we don’t have a lot of visibility on where the endpoint will be, our assumption is that they level out over the longer run around 2.5%-3.0%,” said Adams.

Torres thinks it may take a while for inflation to level out, saying that the Fed has implicitly committed to 3% inflation in the medium term. “Powell and the committee have talked about getting to 2% inflation over time. We expect they’ll get there in 2026. That’s a long time.” The Fed has a 2% target for the Personal Consumption Expenditures Price Index. Torres believes this slow drawdown in inflation means central banks have “implicitly accepted 3% inflation” for a time because they fear job losses would occur if they tried to bring it down faster. He believes that even 3% may be hard to maintain if job growth doesn’t slow.