KEY POINTS FROM TODAY’S JOB REPORT
- Labour market conditions remain robust.
- A solid 428,000 gain in non-farm payroll employment in April (consensus forecast was 380,000) illustrates that the Fed was right to ignore the misleading contraction in first-quarter GDP.
- U.S. has now experienced 12 straight months of >400,000 jobs added.
- Gains in employment were widespread, with leisure & hospitality up 78,000, manufacturing up 55,000 (very strong number), only 2,000 construction jobs created (may be signs of slowing housing market, impact of higher interest rates) and retail up 29,000.
- The unemployment rate was unchanged at 3.6% (consensus was expecting 3.5%) and the participation rate fell back to 62.2%, from 62.4% – as the labour force shrank by 363,000 and the household survey measure of employment declined by 353,000. Those household survey measures are notoriously volatile from month-to-month and some payback was probably inevitable after the run of very strong gains this year in both the labour force and household employment.
- Average hourly earnings increased by a slightly more modest 0.3% m/m last month, but upward revisions to the gains in earlier months mean that the annual rate of earnings growth only edged down to 5.5%, from 5.6%.
CONCLUSION
Overall, with labour market conditions still this strong – including very rapid wage growth – we doubt that the Fed is going to abandon its hawkish plans because of the current bout of weakness in equities.
Equity futures have been all over the place. At time of writing: Dow -0.63%, S&P 500 -0.77% and NASDAQ -1.04%.
Disclaimer:
This commentary is provided for information purposes only and is not an offer or solicitation of an offer to buy or sell any product or service. Unless otherwise stated, all information and opinion contained in this publication were produced by Newday Funds, Inc. (“Newday Impact”) and other sources believed by Newday Impact to be accurate and reliable. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions of the financial markets, general investment strategy, or particular investments are not recommendations to clients and are subject to change without notice.