The US is about to release its April non-farm payroll data; the Federal Reserve may hold rates steady for the rest of the year.
2026-05-08 11:02:11
The U.S. Bureau of Labor Statistics will release April's non-farm payroll data at 8:30 PM Beijing time on Friday. The market widely predicts only 55,000 new jobs will be added that month. Compared to the employment performance during the economic recovery of recent years, this growth rate is significantly weak, but it will still keep the unemployment rate at a relatively low level of 4.3%. Overall, although the U.S. labor market is currently in a slow cooling phase, it maintains overall stability and strong market resilience despite facing multiple internal and external challenges.
In previous years, a monthly increase of less than 100,000 non-farm payroll jobs in the United States was often seen as a sign of a weakening labor market and a warning sign that the economy was about to enter a recession. However, the market logic has changed significantly. At present, a monthly increase of around 100,000 jobs is sufficient to stabilize the overall unemployment rate and gives the Federal Reserve no urgent reason to adjust monetary policy.
David Tinsley, senior economist at Bank of America Research, stated that the core tone of this jobs report is consistent with previous employment data, and related characteristics are even more pronounced. The overall momentum of the labor market, reflected in non-farm payrolls, has entered a stable and solid state. This market stability is only a relative concept, not an absolute positive trend. The U.S. added 178,000 jobs in March, exceeding generally conservative market expectations and marking the best monthly employment performance since December 2024. However, the average monthly job growth over the past twelve months was only 22,000. If the employment boost from the healthcare industry is excluded, the overall number of jobs in the U.S. has actually decreased.
Industry analysts believe that a comprehensive assessment of the current labor market trend cannot rely solely on officially released overall data. Tinsley stated that the US economy currently exhibits significant structural differentiation. While overall wage levels and total employment figures appear stable, various sectors of the economy are displaying a typical K-shaped divergence, meaning that while surface data remains stable, internal development gaps are widening.
The divergence in wage growth is particularly pronounced. While the market forecasts a 3.8% year-on-year increase in average hourly wages in the US in April, this average figure fails to reflect the true distribution of wage growth. Extensive research data from Bank of America reveals that the top third of high-income earners saw a 6% increase in after-tax wages in April, while the lowest-income group experienced only a 1.5% increase. Considering inflation, the US Consumer Price Index rose 3.5% year-on-year in March, meaning that the real income of low-income groups, after adjusting for inflation, has actually decreased, further highlighting the income inequality problem. Furthermore, the hiring situation has diverged across different company sizes, with small and micro-enterprises continuing to shrink their hiring over the past three months, indicating a significant decline in their job absorption capacity.
The complex and divergent landscape of the labor market poses a significant challenge to the Federal Reserve's policymakers, and internal disagreements regarding the future direction of interest rate policy are intensifying.
New York Federal Reserve President John Williams stated that current economic indicators are contradictory. Hard economic data such as initial jobless claims demonstrate market stability, while soft indicators like consumer confidence surveys suggest a weakening economy. He added that most hard economic data points to economic stabilization, while some soft survey data shows the economy is still experiencing a moderate slowdown. Overall, these indicators suggest a continued expansion of slack in the labor market. This divergence between hard and soft data may stem from the current unique market environment of low hiring and low layoffs. Continued close monitoring of the economic situation is necessary to prevent a shift in the market landscape.
In summary, with the labor market generally stable and inflation remaining high, market investors widely expect the Federal Reserve to maintain its current interest rate policy this year. Williams also reiterated his view that the current monetary policy is appropriate for the current economic fundamentals and there is no need for adjustment in the short term.
Employment data standards are quietly changing.
In previous years, a monthly increase of less than 100,000 non-farm payroll jobs in the United States was often seen as a sign of a weakening labor market and a warning sign that the economy was about to enter a recession. However, the market logic has changed significantly. At present, a monthly increase of around 100,000 jobs is sufficient to stabilize the overall unemployment rate and gives the Federal Reserve no urgent reason to adjust monetary policy.
David Tinsley, senior economist at Bank of America Research, stated that the core tone of this jobs report is consistent with previous employment data, and related characteristics are even more pronounced. The overall momentum of the labor market, reflected in non-farm payrolls, has entered a stable and solid state. This market stability is only a relative concept, not an absolute positive trend. The U.S. added 178,000 jobs in March, exceeding generally conservative market expectations and marking the best monthly employment performance since December 2024. However, the average monthly job growth over the past twelve months was only 22,000. If the employment boost from the healthcare industry is excluded, the overall number of jobs in the U.S. has actually decreased.
Employment and salaries show a K-shaped divergence pattern
Industry analysts believe that a comprehensive assessment of the current labor market trend cannot rely solely on officially released overall data. Tinsley stated that the US economy currently exhibits significant structural differentiation. While overall wage levels and total employment figures appear stable, various sectors of the economy are displaying a typical K-shaped divergence, meaning that while surface data remains stable, internal development gaps are widening.
The divergence in wage growth is particularly pronounced. While the market forecasts a 3.8% year-on-year increase in average hourly wages in the US in April, this average figure fails to reflect the true distribution of wage growth. Extensive research data from Bank of America reveals that the top third of high-income earners saw a 6% increase in after-tax wages in April, while the lowest-income group experienced only a 1.5% increase. Considering inflation, the US Consumer Price Index rose 3.5% year-on-year in March, meaning that the real income of low-income groups, after adjusting for inflation, has actually decreased, further highlighting the income inequality problem. Furthermore, the hiring situation has diverged across different company sizes, with small and micro-enterprises continuing to shrink their hiring over the past three months, indicating a significant decline in their job absorption capacity.
The Federal Reserve faces a policy dilemma.
The complex and divergent landscape of the labor market poses a significant challenge to the Federal Reserve's policymakers, and internal disagreements regarding the future direction of interest rate policy are intensifying.
New York Federal Reserve President John Williams stated that current economic indicators are contradictory. Hard economic data such as initial jobless claims demonstrate market stability, while soft indicators like consumer confidence surveys suggest a weakening economy. He added that most hard economic data points to economic stabilization, while some soft survey data shows the economy is still experiencing a moderate slowdown. Overall, these indicators suggest a continued expansion of slack in the labor market. This divergence between hard and soft data may stem from the current unique market environment of low hiring and low layoffs. Continued close monitoring of the economic situation is necessary to prevent a shift in the market landscape.
In summary, with the labor market generally stable and inflation remaining high, market investors widely expect the Federal Reserve to maintain its current interest rate policy this year. Williams also reiterated his view that the current monetary policy is appropriate for the current economic fundamentals and there is no need for adjustment in the short term.
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