Jobs bounce back, but labor costs point to tame inflation

Invesco Fixed Income expects continued strong job growth, solid economic growth and two more Fed rate hikes in 2017

After a disappointing March, strong April employment data — announced May 5 by the Department of Labor — have confirmed that US labor market slack is shrinking and the economy is growing steadily. According to Invesco Fixed Income’s estimates, the addition of 211,000 jobs in April is consistent with overall economic growth of around 2.5% in 2017. The April unemployment rate fell to 4.4% and underemployment came in at 8.6%, close to the cycle lows of the mid-2000s. But mixed underlying wage growth leaves market participants questioning whether or not wage pressures are materializing.