NEW YORK (Reuters) – U.S. job growth increased more than expected in April, underscoring the economy’s strong fundamentals despite a contraction in gross domestic product in the first quarter.
Nonfarm payrolls rose by 428,000 jobs last month, the Labor Department said on Friday. Data for March was revised down to 428,000 jobs added from 431,000. Economists polled by Reuters had forecast payrolls rising by 391,000 jobs. The unemployment rate was unchanged at 3.6%.
The jobs-workers gap widened to an all-time high of 3.4% of the labor force from 3.1% in February. Average hourly earnings increased 0.3% after advancing 0.5% in March.
MARKET REACTION:
STOCKS: S&P e-mini futures briefly turned positive then down 0.55%, pointing to a weak open on Wall Street
BONDS: The yield on the benchmark 10-year note rose to 3.1126%; Two-year Treasury yields rose to 2.7349%,
FOREX: The dollar index turned 0.19% firmer
COMMENTS:
SHAWN CRUZ, HEAD TRADING STRATEGIST, TD AMERITRADE, CHICAGO
“The payrolls was generally a solid report, there was a beat above expectations for the private payrolls number, you had some strength in manufacturing, a lot of those gains were in leisure in hospitality, hourly earnings were a little bit slower than expected but to me the big thing though is the participation rate ticked down a little bit. That is going to be interesting in how the Fed might interpret that, but markets might be OK with that, if nothing else the Fed will interpret that as a sign they can’t be as aggressive with tightening if you are starting to see participation down. A little bit of a crack in the jobs environment might be the one thing to give them pause, because the one reason they can be as aggressive as they are is because they have kind of a window right now where the slowdown globally hasn’t hit the jobs market, it is still a very tight jobs market at the moment.”
“They can be a little bit aggressive and just focus on the price side of their dual mandate but if the jobs market slows down then they have a little bit more of a conundrum on their hands because are they going to honor the full employment or price stability part of their dual mandate. It is something more or less the market should be OK with. If nothing else I would say this swings towards a report that would cause the Fed to be slightly more dovish.”
JUAN PEREZ, DIRECTOR OF TRADING, MONEX USA, WASHINGTON:
“Perhaps today is a day for settling down and seeing less action after two very turbulent days that ultimately leave us at where we started for the week dollar-wise. We know the labor market is tight, this only further confirms it. Nevertheless, wages are still nothing stellar while inflation is the main focus for all outlooks. Expect FX to continue flowing accordingly to the needs of the war and handling its toll.”
RUSSELL PRICE, CHIEF ECONOMIST, AMERIPRISE FINANCIAL SERVICES INC, TROY, MICHIGAN
“It shows that the job market is still solid. Average hourly earnings grew at a more modest pace, which is telling us that wage inflation might be easing, which certainly is a good thing for the Fed and inflation.”
“Over the last few months, we have seen the month-over-month pace of average hourly earnings starting to decelerate somewhat. That’s a positive indicator that this surge in hourly wages that we experienced may finally be easing.”
“Importantly, at this time, given the volatility in the market, any sign of easing inflation pressures should be well received. So, although this is an early signal, we need to see to more months for it to be confirmed. But it’s still a welcome signal.”
BRIAN JACOBSEN, SENIOR INVESTMENT STRATEGIST, ALLSPRING GLOBAL INVESTMENTS, MENOMONEE FALLS, WISCONSIN
“The broad-based increases in payrolls is encouraging. Wages are rising less than inflation, so despite massively high job openings there’s no sign of a wage-price spiral.”
MATTHEW TUTTLE, CHIEF INVESTMENT OFFICER, TUTTLE CAPITAL MANAGEMENT, GREENWICH, CONNECTICUT
Futures “are stronger than they were. The only thing I would be concerned about from a market standpoint is a lot of times on these announcements the first move is usually wrong. I would be watching for a selloff. All in all a positive number. Certainly if you are sitting there worrying about a recession, at least initially, I don’t think there’s anything in here that would say the economy is in the tank. So far so good.”
“The unemployment rate being 3.6% after 12 months in a row of adding over 400,000 jobs, to me that’s an economy that’s cranking. I’m in the camp of ‘worried about a recession’ but looking at these numbers there isn’t anything that’s showing weakness.”
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK
“The topline number was more than expected but within the range of expectations. And the fact that hourly wages were lower than expected should be good for the bond market and that in turn should be good for the stock market.”
“The (decrease in the) participation rate is not terrible news, in that it suggests the labor market might not tighten any further.”
“As far as the Fed is concerned, the (stock market) moves we’ve been seeing are due to the fact that the Fed really doesn’t have the market’s confidence. The speculators are betting on how much the Fed is going to have to raise rates and whether inflation will make Powell cave and raise interest rates by 75 basis points.”
“The good news is that wages were not going up as fast as they were and that should begin to calm down that speculation. The market will have to recognize that maybe inflation is peaking. For now, unfortunately, the markets are testing the will of Powell and the Federal Reserve and are speculating against him.”
“You have to realize what happened yesterday was a test to the market’s technical aspect. Today’s employment data is going to be critical. If we can bounce off this 4100 level and close above it, that could mean the technical deterioration will have ended.”
(Compliled by the global Finance & Markets Breaking News team)
