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After a few months of unwanted growth in the employment market, the April 2024 jobs report indicated signs of cooling. The U.S. added 175,000 jobs, still more than the Fed would like, but fewer than was expected. Wage growth, which had previously increased, slowed to 2.4% and unemployment rose to 3.9%.

Earlier this year, markets were pricing in rate cuts for June, but a few discouraging inflation prints quickly shifted expectations. The Federal Reserve has a dual mandate for monetary policy: achieve maximum employment and stable prices. They are keenly focused on the latter, which you could argue is functioning at the expense of the former. A hot jobs market can keep price gains high, and the central bank’s key focus is to stabilize prices. Higher unemployment is a positive sign, but the trend will need to continue with a lower inflation print on May 15th before rate cuts are part of the Fed’s conversation again.