Huge miss on the jobs report

The US economy added 160,000 jobs in April, fewer than expected, as the unemployment rate held steady at 5%.

Economists had forecast that nonfarm payrolls grew by 200,000, and that the unemployment rate fell to 4.9%.

Construction companies and retailers cut back on hiring as the mining sector continued to bleed jobs.

Sluggish wage growth has been one of the dark spots of the labor market's resurgence.

But April brought some progress. Average hourly earnings rose 2.5% year-on-year, more than expected.

The wage increase could have been because of a calendar quirk. Deutsche Bank's Torsten Sløk noted ahead of the report that because April 15 — payday for those on a bi-weekly schedule — fell early in the survey week for the jobs report, it was likely to cause an upward bias in earnings.

In any case, higher wages would give the Federal Reserve confidence that inflation will move closer to its 2% target. The Fed is trying to decide when next to raise rates, after hiking for the first time in a decade last December.

Ahead of the report, Sam Bullard, senior economist at Wells Fargo, wrote to clients that Friday's print should be a reliable gauge of the recent trend in hiring.

That's because revisions for April jobs growth is usually small. Since 2003, the revisions between the first and third prints have been less than 1,000 on average, he said.

For March, the job gains were revised down to 208,000 from 215,000.

As the economy approaches full employment —meaning pretty much everyone willing to work and looking for a job has one — the unemployment rate is not expected to plunge that much further from its current level, which is near an eight-year low.

The labor force participation rate was expected to hold steady at 63%, but it fell even lower to 62.8%.

It suddenly climbed in the last few months as a near-record number of job openings made employment more attractive for those on the sidelines.

Via Bloomberg, here's what Wall Street was expecting:

Nonfarm payrolls:+200,000
Unemployment rate: 4.9%
Average hourly earnings month-on-month: +0.3%
Average hourly earnings year-on-year: +2.4%
Average weekly hours worked: 34.5

SEE ALSO: EL-ERIAN: Here are 5 reasons why the Fed probably won't do the 'unthinkable'

NOW WATCH: FORMER GREEK FINANCE MINISTER: The single largest threat to the global economy