The days of millions of job gains per month are behind us and the US labor market recovery has moved into a new phase, complete with new challenges: It’s not that companies don’t want to hire, it’s that there were nearly two available positions for every unemployed person as of March. That is constraining how many jobs can be added each month.

Economists polled by Refinitiv predict that Friday’s closely watched monthly jobs report will show the economy added just under 400,000 jobs in April. That would be the slowest job growth since April last year.

Relative to the strongest gains of the recovery, the number sounds disappointing, even though it would mean the economy would be just 1.2 million jobs shy of the total number of jobs lost during the pandemic.

“Some might say [job growth is] normalizing as the economy is approaching maximum employment,” ADP chief economist Nela Richardson told reporters on Wednesday, adding that she believes it will be a bumpy road back to normalcy.

On Wednesday, the ADP Employment Report, which counts private payrolls, came in below expectations, with just 247,000 jobs added in April.

Economist: US may be at ‘peak of job openings and quit rates’ with recession lurking

The government’s official unemployment rate is expected to slide to a new pandemic-era low of 3.5%, matching the historic low from before Covid hit. The last time joblessness was this low prior to 2019 was in 1969.

The bottom line: Friday’s report should still look pretty good on the whole, especially when compared to pre-pandemic times. But it’s also clear that the pace of the recovery has entered a new phase.

Weekly claims for unemployment benefits returned to pre-pandemic levels months ago. Data released Thursday showed that last week, 200,000 workers filed initial jobless claims, adjusted for seasonal swings, slightly above expectations and the prior week’s level.

Continuing claims, which count workers who have filed for benefits for at least two weeks in a row, fell below 1.4 million to the lowest level since January 1970, the Department of Labor reported. The four-week average of this figure stood just above 1.4 million — the lowest level since February 1970.

Inflation hurts hiring

Meanwhile, America’s inflation problem is also affecting the hiring market. As consumers watch prices rise on everything from food to rent and gas, businesses have to increase wages to compete for talent. That’s hitting smaller businesses especially hard, and means they can’t hire as much as they might otherwise do.

As of March, the nation had a record number of jobs available — 11.5 million — data from the Bureau of Labor Statistics showed earlier this week. The number of workers voluntarily leaving their jobs also hit a historic peak at 4.5 million in March, but hiring still outpaced quitting.

Even though these figures are a month older than Friday’s jobs numbers, they are an indication of the appetite to hire, which should have remained strong in April.

As for the summer months, any relief on the inflation front might help out, too. The manufacturing industry, for example, could see some more job growth, and leisure and hospitality also ramps up seasonal hiring, Richardson said.

The April jobs report is set to be released on Friday at 8:30 a.m. ET.

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