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But February and March were revised down a total of 149,000, taking some of the wind out of the forward drive.

The April jobs report was another upward surprise, with 253,000 jobs added and unemployment down to 3.4%, even lower than the 3.6% in April 2022, the lowest on record since April 1969, and not what the Federal Reserve is seeking. Last month also saw a 0.2% increase in average real hourly wages.

That is more grist for the Fed’s future interest rate hike mill. But there is also data from these reports that suggest things aren’t as inflationary as they might seem on the surface.

Revisions to previous estimates in February and March cut those numbers by a total 149,000, for a monthly average of 222,000 additions. As Heidi Shierholz, president of the Economic Policy Institute and former chief economist of the Department of Labor tweeted, “This is down from the blistering pace of early 2022—in the first quarter last year we added 561,000 jobs per month on average—but still very strong.”

As for wages, Shierholz wrote, “People are making a big deal about the increase in wage growth in April, but remember, the month-to-month data are volatile. Annualized quarterly wage growth was 3.8% in April, down from 3.9% in March.” She further emphasized that the numbers are not inflationary. However, previously the Fed had made clear that it looks at wage growth almost as a binary, whether it is near or above the 2% target inflation rate.

While many have assumed that the May interest rate increase on the part of the Federal Open Market Committee might be the last, with a gradual reversal in the cards within the near future, this may not be the case.

“Interest rates are going to have to remain elevated,” said Sean Snaith, director of the University of Central Florida’s Institute for Economic Forecasting, in emailed comments. “This kind of strength in the labor market makes it more difficult for the Fed to continue its reduction in inflation. What this means is inflation may drag on a little longer and so will higher interest rates.”

“The strong performance of the labor market dampens expectations of an immediate recession, but it also should reduce the market expectations of rate cuts unfolding as soon as the third quarter,” noted Nationwide Chief Economist Kathy Bostjancic in an emailed note. “Our view remains that a recession remains on the horizon, unfolding in the second half of the year, but the ongoing solid job gains and buoyancy in wage growth does suggest it could start later in the year.”