The final shoe has dropped in this Jobs Week, with a fresh non-farm payroll report from the Bureau of Labor Statistics (BLS) hitting the tape: 164K new jobs were created in April, and the Unemployment Rate has fallen to 3.9% - the lowest since December 2000, back when America was "Livin' la Vida Loca." Both figures were lower than the 195K and 4.0% expected, respectively, but remain of the wider narrative that we are still in a very robust labor market.
Revisions for February and March headline numbers grew 30K in aggregate: February down 2000 to a still-outstanding 324K and March up from 103K originally reported to 135K this morning. This illustrates 3-month jobs growth average of 208K, still roughly double the amount of jobs the country needs to generate employment growth, according to economists.
Labor Force Participation stayed relatively in-line at 62.8%, as the baby boomer retirement parade continues. By industry, a standout 24K new jobs in Manufacturing is encouraging, and is indeed a big improvement from where this monthly figure was just a couple years ago. Healthcare, routinely at the top of the industry list, also brought 24K new jobs in April.
One metric of much interest to economists and market participants concerned with Fed interest rate policy is Average Hourly Wage Growth. This number was also lower than expected at +0.15% (0.2% estimated), and +2.6% year over year. The U-6 number, aka "real" unemployment, reached 7.8%, the lowest since December 2001. Even though this may disappoint the overall U.S. labor force, it is still a Goldilocks number for the market: huge amounts of Americans employed, without having to pay them (much) more. This will likely speak to Fed members considering interest rate policy in June and beyond that we are not seeing the need to fight spiking inflation, which notably higher wage growth would indicate.
That said, advocates of the massive corporate tax cuts from late last year have little to back up their claims that jobs and wages would grow meaningfully above trend since 2010, when the employment recovery began to take hold. Perhaps this is yet to come, but for now the evidence is lacking.
Market futures peeked into the green upon the initial release of the jobs report, but have slid back modestly into the red a half hour ahead of Friday's opening bell. Likely other matters are still occupying the minds of investors more, such as the gloomy outlook of a trade war with China. This is far from a done deal - though we have seen things like the price of aluminum already ratcheting up - but as the stock market acts as a forward indicator of the economy, the specter of supply gluts and higher prices is currently darkening positive narratives like the enormously strong U.S. employment market through the first third of 2018.
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