The April jobs report is expected to show the US labor market grew at a steady but decelerating rate last month, providing little reason for investors to change their view on the Federal Reserve's next move.

On Friday, the Bureau of Labor Statistics will publish the April jobs report at 8:30 a.m. ET, with nonfarm payroll growth set to come in at 241,000, down from March's gain of 303,000.

This level of job growth is still more than double what economists estimate is required for the US economy to sustain its current level of unemployment. The unemployment rate in April is expected to remain steady at 3.8%.

Average hourly earnings, closely watched by the Fed for signs of rising inflation pressures, are set to rise 0.3% over the prior month, matching March's increase and 4% over last year, a slowdown from the 4.1% annual gain seen in March.

Earlier this week, data from the BLS suggested wage pressures building after the Employment Cost Index (ECI) accelerated in the first quarter of 2024 to reach its highest level in a year.

In a press conference on Wednesday, Fed Chair Jerome Powell downplayed the idea that wage pressures today are creating a meaningful inflationary impulse, noting "essentially all wage measures have come down substantially" from peaks reached after the pandemic.

Average hourly earnings, for instance, grew more than 5% annually during each month between September 2021 and December 2022.

"Forward-looking indicators like the JOLTS quits rate point to more slowing in wage growth," wrote Nancy Vanden Houten, lead US economist at Oxford Economics, in a note this week.

Noting "unseasonably mild winter weather," Stephen Brown, an economist at Capital Economics, sees job growth slowing to 200,000 in April after a strong first quarter.

"No single survey indicator is a great guide to [labor] market conditions," Brown wrote in a note to clients, "but they are currently all sending the same message." Which is that job gains of 303,000, 270,000, and 256,000 in March, February, and January, respectively, overstate the strength of the US labor market.

Vanden Houten also noted that revisions would be of particular interest on Friday, with the average month seeing job gains revised down by 13,000 over the past year.

Over at Bank of America, Michael Gapen and the US economics team wrote in a note to clients that recent changes in California's minimum wage law could pose some upside pressure on wage figures.

The firm expects wage increases above consensus forecasts, with monthly gains of 0.4% and April's annual increase coming in at 4.2%.

And while these impacts would reflect a one-time change in a labor law in the nation's biggest state, Bank of America isn't sure markets wouldn't be quick to view this as posing a renewed threat to the Fed's inflation goals.

"While we are unlikely to view a wage number in line with our forecast as troublesome and a break in the trend deceleration in wage growth over the past three years, financial markets may not view the number as we do," the firm wrote.

"There is a chance markets see faster wage growth and chalk it up as another piece of evidence that overall price pressures are building."

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