What's going on?

It was a happy Friday as new US jobs data showed that 211,000 jobs were created in April, which is more than double the amount created in March. That put the unemployment rate at its lowest in a decade!

What does this mean?

This is re-assuring news after a shaky start to 2017 called the health of the US economy into question. The US Federal Reserve (�the Fed�) relies on various indicators, especially employment, to determine the economy�s ability to withstand interest rate increases. Remember, higher interest rates make it more expensive to borrow and thus spend money, so the Fed wants the economy to be in good shape before this happens.


As a result, Friday�s robust jobs report triggered a sigh of relief, and expectations for another rate rise in June rose further. A wider measure of unemployment that takes into account those not actively looking for work and part-timers, who would rather be full-timers, also dropped to its lowest level in almost a decade � providing further comfort that the employment situation is strengthening.

Why should I care?

Bigger Picture: More people are getting hired but wage growth isn�t increasing. �

As the employment landscape improves and fewer qualified workers are available to hire, wage growth is usually expected to accelerate in the face of lower supply. Surprisingly, the pace of wage growth has actually slowed over the last 12 months. If employment continues to gain momentum, upward pressure on wages is expected down the line.


For you personally: Inflation is catching up with wage growth.

The rise in prices of goods and services (inflation) over the last 12 months was almost the same as the rise in wages, meaning that real (inflation adjusted) wage growth was essentially flat. Consumption is a key pillar of economic growth, and higher real wages fuel it by giving people more disposable income to spend after their basic needs are met. The Fed will be keeping an eye on this next month before it makes a decision on its next rate hike.