WASHINGTON, May 5: US job creation weakened last month to its slowest pace since after Hurricane Katrina, but wages took off in a warning sign for the Federal Reserve, government data showed on Friday.

The Labour Department’s “non-farm payrolls” report showed that US employers added 138,000 new jobs in April, the worst level since October and much less than Wall Street’s forecast of 200,000.

The jobless rate was unchanged in April at 4.7 per cent, the department said.

Treasury Secretary John Snow had an upbeat spin on the report.

“This month’s report, showing more jobs, more hours worked and higher wages tells a positive story,” he said.

“There is a lot of momentum for more good jobs and for rising wages. The outlook for the future is very strong.”

Economists say the US economy needs to create between 150,000 and 175,000 new jobs each month to keep pace with population growth in the workforce.

Ethan Harris at Lehman Brothers said the April figures were in line with “trend-like job growth instead of booming job growth”, after payroll increases of 200,000 in both February and March.

“The rest of the report, however, did show signs of strength that will keep the Fed a little bit nervous,” he said.

“You’re starting to see some pass-through from commodity costs. The labour market is now tight enough that workers can get cost-of-living raises that they weren’t getting a year ago.”

While job creation was weak last month, wages surged. Average hourly earnings increased nine cents, or 0.5 per cent, to $16.61 in April. Economists expected earnings to rise 0.3 per cent.

Earnings are now up 3.8 per cent in the past year, the biggest year-on-year gain since August 2001.

The acceleration will add to pressure on the US central bank at a meeting next Wednesday to keep raising interest rates to stamp out inflationary pressures.

But US workers are also producing more for every hour they work, which could offset the inflationary impact of higher wages.—AFP