The US unexpectedly added 263,000 new jobs in April with unemployment dipping to 3.6%, while wage growth continued to languish.
The better-than-expected number has added more fuel to the revived narrative of a “Goldilocks market,” benefiting from an economy that is strong, but not strong enough to push the Federal Reserve to raise interest rates.
Major stock benchmarks in New York continued their climb following the news.
But also on Friday, the Institute for Supply Management’s gauge of service sector activity plunged to its lowest level in two years. That comes on the heels of the same group’s manufacturing sentiment measure’s slide over the weekend.
The jobs report was touted by the Trump administration and much of the media as a sign of a booming economy. But economists noted that the lower unemployment rate was driven largely by declining participation in the labor market.
As we wrote earlier this week, Trump’s economic policy has given a boost to medium-sized businesses, where job growth has been concentrated.
That also helps explain why wages have fallen as hiring has been concentrated on lower-paid employment provided by smaller businesses.
Manufacturing activity, meanwhile, has fallen to the level not seen since before Trump was elected, with services now following suit.
In the case of manufacturing, economists widely agree that the uncertain trade environment has weighed on sentiment, as global trade volume plunged and business investment decisions were held up.