Delightfully dull

Boring is beautiful for US employment

April’s 223,000 new positions represent a welcome rebound from a pitiful March, even if the pace is modest. The jobless rate also dipped to 5.4 per cent, while participation hardly budged. It all adds up to a durable recovery that should lead soon to higher wages and interest rates.

With March worse than originally thought, after a downward revision to 85,000 jobs, April looks downright spectacular at triple the rate. Even so, the pace has been slowing. In the final third of 2014, employment grew on average by 300,000 jobs a month. In the first four months of this year, the figure is just under 200,000.
 
Other indicators are holding up, too. The jobless rate ticked down slightly again, as it has been doing slowly for the last six months, inching toward what many economists consider full employment. And the active portion of the workforce even moved up a bit, to 62.8 per cent, but has shown remarkable consistency since late 2013.

While all the various data points could be considered signs of a stagnant labour market, they are more importantly an indicator of stability. If the strong growth of a couple of years ago is difficult to sustain, finding a solid equilibrium is the next best thing. If nothing else, it should clear the way for wages to start growing faster. In April, hourly earnings probably outpaced inflation, with a 2.2 per cent annualised gain from a year ago.

A steady state also would mean the Federal Reserve could begin the arduous process of normalising the cost of borrowing again. Slow and careful will be the way, and interest rate hikes may not start till autumn at the soonest. At this point, however, all these measured moves combine to suggest that the US economy is indeed sustainably back on track.