Lack of wage acceleration is the main surprise in jobs report, economists say

Pay growth was stuck at 2.6% in the 12 months ending April.

Here are some early comments from economists about the April jobs report, which showed the U.S. adding 164,000 jobs and unemployment falling to 3.9% — the first time the jobless rate has dropped below 4% since the end of 2000. Average hourly wages rose just 0.1% and the yearly rate of pay increases was unchanged at 2.6%.

Read more from MarketWatch: Unemployment rate falls to 17-year low as U.S. adds 164,000 new jobs.

• Jared Bernstein, who was Vice President Joe Biden’s chief economist, said the report looked “more moderate than strong” and chalked up the 3.9% unemployment figure to a tick down in the labor force.

• “The main surprise was on the wages side, which continue to show little in the way of acceleration despite how low the jobless rate is. The 0.1% gain on the month, and 2.6% annual pace, were both a tick below the street’s forecast and there was a slight downward revision to the prior month as well.” — Andrew Grantham, CIBC World Markets.

• “It may be surprising that wage pressures are not more pronounced with joblessness now below 4%. It stands to reason that wage growth will continue to accelerate as the untapped portion of the labor pool continues to evaporate. Still, the potential for labor-force participation to increase as workers re-enter the workforce provides some additional supply that isn’t necessarily apparent in the unemployment rate.” — Jim Baird, Plante Moran Financial Advisors.

• Scott Paul of the Alliance for American Manufacturing called the month’s manufacturing jobs data “great,” and said fears of jobs lost to tariffs haven’t come true.

• “The April employment report delivered a downside surprise for payrolls and threw a wrench into the recent wage momentum story. We read the employment disappointment as largely noise, especially considering net upward revisions over the last two months, although it could be indicative of growing labor shortages. The deceleration in wage growth was more surprising to us, especially given such signs of labor market tightness. Why this tightness is not feeding into greater average hourly earnings growth remains a bit of a puzzle.” — BNP Paribas U.S. economics team.

• Republicans on the Congressional Joint Economic Committee celebrated the 3.9% unemployment. MarketWatch’s Rex Nutting, meanwhile, says there’s a more important number to pay attention to.