The job market is starting to show cracks. Hiring fell short of expectations for the first time in 6 months.

• The US unemployment rate remained low in April, but it ticked up.
• Nonfarm payrolls increased by 175,000 in April, per a news release on Friday.

The US unemployment rate slightly increased from March to April. Plus, job growth in April slowed down a lot, a new labor market report on Friday showed.

"Compared to expectations, definitely was a disappointing report," Nick Bunker, the economic research director for North America at the Indeed Hiring Lab, told Business Insider. "But, I think if the underlying trend in the labor market is toward moderation, you're going to have reports like this from time to time that come in a little bit weaker than expected or what you'd want to see."

The economy added 175,000 jobs in April, per the news release from the Bureau of Labor Statistics on Friday. This job growth for the US was way below the forecast of 238,000 and the first time the initial print has come in below expectations since last October.

"We're not worried because this is another strong jobs report, and these numbers continue to prove month after month that the president's economic strategy is working," Acting Secretary of Labor Julie Su told BI.

The release said March's job growth was revised from 303,000 to 315,000. February's job growth was revised again, from 270,000 in the previous revision to 236,000.

Julia Pollak, the chief economist at ZipRecruiter, told Business Insider that "if you average over the past, say, 18 months or so," then the labor market looks stable since around August 2022.

Additionally, the unemployment rate is still below 4%. April's rate was expected to be 3.8%, but the unemployment rate increased from 3.8% in March to 3.9% in April.

The US labor force participation rate stayed at 62.7%. The employment-population ratio dropped ever so slightly from 60.3% in March to 60.2% in April.

Wage growth is still happening but at a much lower pace. Average hourly earnings increased from $33.44 in April 2023 to $34.75 in April 2024, or a 3.9% increase. That's below March's year-over-year increase of 4.1%. Back in April 2023, the year-over-year percent change was 4.7%.

Average hourly earnings also saw cooler wage growth when looking at month-over-month changes. While these earnings rose 0.3% from February to March, they increased by only 0.2% from March to April.

Pollak said while the first quarter of the year looked like there was too much inflationary growth, she said "this report shows a return of the labor market to the trend of gradually cooling, normalizing job growth and wage growth."

Healthcare continued to see strong employment increases, with employment rising by 56,200 in April.

However, the information sector saw a small drop in its employment in April, declining by 8,000. Within that, publishing industries saw employment rise while the BLS found motion picture and sound recording industries heavily contributed to the employment decline for the information sector.

Bunker said employment for the government sector "really slowed down in April." That sector saw employment rise by 8,000, which is far below the 72,000 gain in March or even the 55,000 gain in February.

Given it has been a big contributor to employment, Bunker said this is something to watch.

"Maybe there's not as much gas there, or maybe it's just a one-month aberration," Bunker said.

In addition to the government sector, the report noted several industries that didn't see big changes in their employment.

"Employment was little changed over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; information; financial activities; professional and business services; leisure and hospitality; and other services," Friday's news release stated.

Friday's news release about the labor market comes after the Federal Open Market Committee meeting earlier this week. The Fed held interest rates steady, Business Insider's Ayelet Sheffey reported.

"Inflation has eased substantially over the past year while the labor market has remained strong and that's very good news," Jerome Powell, the chair of the Federal Reserve, said at a press conference on Wednesday. "But inflation is still too high, further progress in bringing it down is not assured, and the path forward is uncertain."

Inflation, as seen by the personal consumption expenditures price index, has been above the Fed's 2% target. This index climbed 2.7% in March from a year prior. The consumer price index also shows inflation is too high, rising 3.5% in March from a year prior.

"As long as the unemployment remains low, we're close to full or maximum employment, if wage growth continues to tick down, I think that's going to make the Fed feel more and more comfortable about the labor market, not pushing up on inflation," Bunker said.

Bunker told BI days before the Federal Open Market Committee meeting and the release of new labor market data that signs indicate the labor market has cooled.

"It's still robust but in a very non-inflationary way," Bunker said.

A news release from the Bureau of Labor Statistics from Wednesday also highlighted Bunker's point. There were 8.5 million job openings in March, and while that wasn't a major dip from the 8.8 million in February, it does add to the point of a moderating but robust labor market. The number of people quitting also fell from 3.5 million in February to 3.3 million in March.

This slower jobs market could mean the Fed might cut rates a little sooner than expected.

Powell said at the press conference that the Fed is "prepared to respond to an unexpected weakening in the labor market."

Pollak said it's "no longer a white-hot labor market" or a job "candidate's market in every industry where workers can get whatever they want."

"That's not the case, but there's sort of a healthy balance now," Pollak said. "Workers are still receiving real wage gains."