US economy beats forecasts with 253,000 new jobs in April, as jobless rate falls to 3.4% – business live | Business
US jobs report released
Newsflash: more jobs were created across the US economy than expected last month, despite higher interest rates.
The US Non-Farm Payroll rose by 253,000 in April, rather stronger than the 180,000 which economists expected.
This suggests that the Federal Reserve’s series of increases in interest rates over the last year are not cooling the labor market as much as the Fed would like.
But March’s NFP has been revised down, to show that 165,000 new jobs were created, not the 236,000 first expected.
February’s NFP has also been revised lower, by 78,000, from +326,000 to +248,000.
With these revisions, employment in February and March combined is 149,000 lower than previously reported.
April’s increase is lower than the average monthly gain of 290,000 over the prior six months, point out the Bureau of Labor Statistics, adding that:
In April, employment continued to trend up in professional and business services, health care, leisure and hospitality.
Key events
The yield, or interest rate, on US government debt is jumping on the back of today’s hot jobs report.
It’s pushing up the UK’s borrowing costs too, and those of eurozone governments.
The yield on two-year US Treasury bills has jumped sharply to 3.87%, up from 3.73%, a sign that traders believe further US interest rate rises are more likely.
Longer-dated bond prices are also falling, pushing up the yield on 10-year US Treasuries by 9 basis points to 3.44%, from 3.35%.
UK gilts are also showing similar, though less dramatic moves.
The yield on two-year UK debt has risen to 3.77% from 3.7%, with 30-year gilt yields rising to 4.17% from 4.09%.
Today’s latest jobs report was ‘hot’ across the board, says Daniele Antonucci, chief economist & macro strategist at Quintet Private Bank, adding:
Payroll employment, the unemployment rate and hourly earnings all came in stronger than expected.
Of these three numbers, hourly earnings is probably the key one. This is because wages are a key driver of inflation, particularly for many services.
The US dollar has climbed after the economy added more jobs in April than expected.
This has pulled the British pound away from this morning’s 11-month high (of $1,2634), back to $1.259.
Harvard professor Jason Furman, a former director of president Biden’s National Economic Council, makes some interesting points on today’s jobs report:
This report should not be mistaken for an economy in great shape, cautions Bryce Doty, senior portfolio manager at Sit Investment Associates.
Doty says the jobs data is strong, but adds:
People are going back to work because they have burned through their savings. Companies may finally be able to fill positions that have been open for a long time.
This report should not be mistaken for an economy in great shape given the recent string of poor economic data and looming credit crunch.
And on the 4.4% year-over-year increase in hourly earnings, Doty adds:
If workers typically become about 2% more productive each year and companies increase wages by 4.4%, businesses only need to raise prices by 2.4% to maintain profit margins. We do not see 4.4% wage growth as inflationary.”
Hugh Grieves, fund manager of the Premier Miton US Opportunities Fund, says economists have been confounded (not for the first time) by today’s jobs report:
After 14 months of interest rate increases, the US unemployment rate has fallen to just 3.4%, lower than it was at the start of the hiking cycle (3.6%). Clearly economists need to rethink their forecasts of imminent recession.
“Given that the Federal Reserve hinted this week that it would pause on raising interest rates further, markets are now likely to be in a position to react positively to stronger economic data, rather than see it as an invitation for more aggressive Fed tightening.”
Andrew Hunter, Capital Economic’s deputy chief US economist, predicts that the US central bank will still pause its interest rate hikes, despite April’s stronger-than-expected jobs report.
The 253,000 gain in non-farm payrolls in April suggests that the labour market remains resilient despite the banking sector turmoil and broader signs of an economic slowdown.
Nevertheless, that stronger-than-expected gain was offset by sharp downward revisions to previous months, and, in any case, we doubt it will have the Fed reconsidering its plans for a pause given the wider evidence that labour market conditions are cooling.
Today’s jobs report shows that America’s labor market is strong, says Odeta Kushi, deputy chief economist at financial services company First American.
There’s no sign of a recession in the report, she argues, even though revisions to February and March’s data means job creation in those months was 149,000 lower than previously reported.
Average hourly earnings accelerated in April, bringing some relief to workers struggling with inflation, but causing a headache for the Federal Reserve.
Average hourly earnings for all employees on private nonfarm payrolls rose by 16 cents, or 0.5%, to $33.36. That’s up from 0.3% wage growth in March.
Over the past 12 months, average hourly earnings have increased by 4.4%, up from 4.3% in the year to March.
The drop in the US jobless rate since the pandemic hit the US economy is really quite impressive:
US unemployment rate dips to 3.4%
The US jobless rate has fallen to 3.4%, from 3.5% in March.
The number of unemployed persons was ‘little changed’ in April, at 5.7 million, the Bureau of Labor Statistics reports.
This unemployment rate has ranged from 3.4% to 3.7% since March 2022, a historically pretty strong level.
US jobs report: the details
Employment continued to trend up in US professional and business services, health care, leisure and hospitality, and social assistance, the jobs report shows.
The professional and business services sector added 43,000 new jobs, more than the recent average.
Professional, scientific, and technical services added 45,000 jobs.
Employment in health care increased by 40,000 in April,
Bars and restaurants also added jobs – with employment in leisure and hospitality rising by 31,000 in April. But that’s below the average of 73,000 jobs per month over the prior 6 months, with employment around 400,000 below its pre-pandemic level.
Social assistance added 25,000 jobs, in line with the average monthly gain of 21,000 over the prior 6 months.
The financial sector shrugged off the turmoil in the banking sector too. Employment in financial activities increased by 23,000 in April, with gains in insurance carriers and related activities (+15,000) and in real estate (+9,000).
US jobs report released
Newsflash: more jobs were created across the US economy than expected last month, despite higher interest rates.
The US Non-Farm Payroll rose by 253,000 in April, rather stronger than the 180,000 which economists expected.
This suggests that the Federal Reserve’s series of increases in interest rates over the last year are not cooling the labor market as much as the Fed would like.
But March’s NFP has been revised down, to show that 165,000 new jobs were created, not the 236,000 first expected.
February’s NFP has also been revised lower, by 78,000, from +326,000 to +248,000.
With these revisions, employment in February and March combined is 149,000 lower than previously reported.
April’s increase is lower than the average monthly gain of 290,000 over the prior six months, point out the Bureau of Labor Statistics, adding that:
In April, employment continued to trend up in professional and business services, health care, leisure and hospitality.
Interestingly, every US non-farm payrolls number in the last 12 months has beaten the consensus forecast, points out Jim Reid of Deutsche Bank.
That shows that we’re currently in a labour market that few have fully understood, Reid tells clients, showing this chart to make his point:
Reid explains:
The reality is that the labour market is usually the last shoe to drop in the business cycle. Labour markets are usually relatively strong until the recession starts.
For the record, DB is assuming the run of 12 successive beats will come to an end today with a +150k forecast relative to the +185k consensus. If we’re wrong we’ll highlight the fact that the individual monthly numbers are as close to a random number generator as you can get in financial markets.
If correct we will of course put it down to skill.
But of course! We’ll find out which, in 10 minutes….
A tempestuous week for global markets will come to a crescendo today with the latest round of US employment data (in 10 minutes), predicts Marios Hadjikyriacos, senior investment analyst at XM:
Another solid report is anticipated, with nonfarm payrolls expected to clock in at 180k in April, less than the 236k in March but still a healthy number overall.
The unemployment rate is seen ticking up, albeit from historically low levels, while wage growth is projected to hold steady.
Markets brace for US jobs report
Tension is mounting in the markets as investors await the latest US jobs report.
The Non-Farm Payroll, due in around 20 minutes, is expected to show a slowdown in job creation last month.
Economists predict that around 180,000 new payrolls were added in April, down from 236,000 in March (although that may be revised today). That would be the smallest monthly increase since late 2020, and a sign that the economy has lost momentum.
Summarize this content to 100 words US jobs report releasedNewsflash: more jobs were created across the US economy than expected last month, despite higher interest rates.The US Non-Farm Payroll rose by 253,000 in April, rather stronger than the 180,000 which economists expected.Whoa. 253K jobs added in April. More than the 180K expected. And unemployment rate remained 3.4%. Was forecast to rise to 3.6%. Wage growth at 4.4% YOY. https://t.co/sX6qnZch01— Paul R. La Monica (@LaMonicaBuzz) May 5, 2023This suggests that the Federal Reserve’s series of increases in interest rates over the last year are not cooling the labor market as much as the Fed would like.But March’s NFP has been revised down, to show that 165,000 new jobs were created, not the 236,000 first expected.February’s NFP has also been revised lower, by 78,000, from +326,000 to +248,000.With these revisions, employment in February and March combined is 149,000 lower than previously reported.April’s increase is lower than the average monthly gain of 290,000 over the prior six months, point out the Bureau of Labor Statistics, adding that: In April, employment continued to trend up in professional and business services, health care, leisure and hospitality. Updated at 08.36 EDTKey eventsThe yield, or interest rate, on US government debt is jumping on the back of today’s hot jobs report.It’s pushing up the UK’s borrowing costs too, and those of eurozone governments.The yield on two-year US Treasury bills has jumped sharply to 3.87%, up from 3.73%, a sign that traders believe further US interest rate rises are more likely.Longer-dated bond prices are also falling, pushing up the yield on 10-year US Treasuries by 9 basis points to 3.44%, from 3.35%.UK gilts are also showing similar, though less dramatic moves.The yield on two-year UK debt has risen to 3.77% from 3.7%, with 30-year gilt yields rising to 4.17% from 4.09%.Today’s latest jobs report was ‘hot’ across the board, says Daniele Antonucci, chief economist & macro strategist at Quintet Private Bank, adding: Payroll employment, the unemployment rate and hourly earnings all came in stronger than expected. Of these three numbers, hourly earnings is probably the key one. This is because wages are a key driver of inflation, particularly for many services. The US dollar has climbed after the economy added more jobs in April than expected.This has pulled the British pound away from this morning’s 11-month high (of $1,2634), back to $1.259.#USA job growth beat market estimates at 253,000 #jobs increase. #Dollar jumped since that could signal extended monetary tightening, #commodities should have gone down, but they didnt. Maybe a relieve regarding recession worries— Marcelo Teixeira (@tx_marcelo) May 5, 2023 Harvard professor Jason Furman, a former director of president Biden’s National Economic Council, makes some interesting points on today’s jobs report:Job growth IS slowing, from a ~325K/month pace to a 225K/month pace.The unemployment rate is very low, at 3.4%. Lowest ever for Black unemployment.Wage growth highest in a year, but noisy. pic.twitter.com/NNMadidJH4— Jason Furman (@jasonfurman) May 5, 2023 Here is wage growth, you can see after a few low months it was the highest in a year–although it is both noisy and affected by composition (e.g., some high-wage sectors appeared to add jobs). is moving towards a place more consistent with the ECI/Atlanta tracker. pic.twitter.com/6q8K701gpz— Jason Furman (@jasonfurman) May 5, 2023 And here is something truly amazing, the employment-population ratio for prime age workers is 0.3pp above where it was prior to COVID. This reflects a combination of the unemployment rate and the labor force participation rate. pic.twitter.com/0eHMwgQnrP— Jason Furman (@jasonfurman) May 5, 2023 This report should not be mistaken for an economy in great shape, cautions Bryce Doty, senior portfolio manager at Sit Investment Associates.Doty says the jobs data is strong, but adds: People are going back to work because they have burned through their savings. Companies may finally be able to fill positions that have been open for a long time. This report should not be mistaken for an economy in great shape given the recent string of poor economic data and looming credit crunch. And on the 4.4% year-over-year increase in hourly earnings, Doty adds: If workers typically become about 2% more productive each year and companies increase wages by 4.4%, businesses only need to raise prices by 2.4% to maintain profit margins. We do not see 4.4% wage growth as inflationary.” Hugh Grieves, fund manager of the Premier Miton US Opportunities Fund, says economists have been confounded (not for the first time) by today’s jobs report: After 14 months of interest rate increases, the US unemployment rate has fallen to just 3.4%, lower than it was at the start of the hiking cycle (3.6%). Clearly economists need to rethink their forecasts of imminent recession. “Given that the Federal Reserve hinted this week that it would pause on raising interest rates further, markets are now likely to be in a position to react positively to stronger economic data, rather than see it as an invitation for more aggressive Fed tightening.” Andrew Hunter, Capital Economic’s deputy chief US economist, predicts that the US central bank will still pause its interest rate hikes, despite April’s stronger-than-expected jobs report. The 253,000 gain in non-farm payrolls in April suggests that the labour market remains resilient despite the banking sector turmoil and broader signs of an economic slowdown. Nevertheless, that stronger-than-expected gain was offset by sharp downward revisions to previous months, and, in any case, we doubt it will have the Fed reconsidering its plans for a pause given the wider evidence that labour market conditions are cooling. Today’s jobs report shows that America’s labor market is strong, says Odeta Kushi, deputy chief economist at financial services company First American.There’s no sign of a recession in the report, she argues, even though revisions to February and March’s data means job creation in those months was 149,000 lower than previously reported.The labor market is strong. Total nonfarm payroll employment rose slid to 3.4%. Labor force participation was flat, while prime-age participation (25-54) ticked up to 83.3%, the highest since 2008. (2/n) pic.twitter.com/dLH55fau7i— Odeta Kushi (@odetakushi) May 5, 2023 Important to note February and March both were revised down. The trend is still slower hiring, but the slowdown is very gradual. (3/n)— Odeta Kushi (@odetakushi) May 5, 2023 Average hourly earnings for private-sector employees rose 4.4% from a year earlier, up from the March annual pace of 4.3%. (4/n)— Odeta Kushi (@odetakushi) May 5, 2023 If you’re looking for signs of a recession in the labor market data, you won’t find it in this report. Soft landing is still on the table. (5/n)— Odeta Kushi (@odetakushi) May 5, 2023 Average hourly earnings accelerated in April, bringing some relief to workers struggling with inflation, but causing a headache for the Federal Reserve.Average hourly earnings for all employees on private nonfarm payrolls rose by 16 cents, or 0.5%, to $33.36. That’s up from 0.3% wage growth in March.Over the past 12 months, average hourly earnings have increased by 4.4%, up from 4.3% in the year to March.The drop in the US jobless rate since the pandemic hit the US economy is really quite impressive:Three years ago, the unemployment rate hit a record high 14.7% as the pandemic began.This April, the unemployment rate hit 3.4%, tying a multi-decade low. A truly remarkable pace of recovery.#JobsReport 5/ pic.twitter.com/VxOiSiFOrm— Daniel Zhao (@DanielBZhao) May 5, 2023The unemployment rate was also 3.4% in Jan 2023 but, before that, hadn’t been as low since 1969 and hadn’t been lower since 1953 (70 yrs).— Aaron Sojourner (@aaronsojourner) May 5, 2023 Updated at 08.48 EDTUS unemployment rate dips to 3.4%The US jobless rate has fallen to 3.4%, from 3.5% in March.The number of unemployed persons was ‘little changed’ in April, at 5.7 million, the Bureau of Labor Statistics reports.This unemployment rate has ranged from 3.4% to 3.7% since March 2022, a historically pretty strong level.Little sign yet of softness in the US #Labour market.With a net 253k of job gains in April vs 180k est. – alongside a 3.4% unemployment rate (3.6% est) and a 4.4% wage rise (4.2%) .Overall good economic news, but maybe not for stocks & hopes of interest rate cuts in H2’23. pic.twitter.com/5ZVgKIfq96— PMH Capital (@CapitalPmh) May 5, 2023 US jobs report: the detailsEmployment continued to trend up in US professional and business services, health care, leisure and hospitality, and social assistance, the jobs report shows.The professional and business services sector added 43,000 new jobs, more than the recent average.Professional,…
https://www.theguardian.com/business/live/2023/may/05/pound-dollar-us-banking-turmoil-jobs-report-inflation-recession-business-live US economy beats forecasts with 253,000 new jobs in April, as jobless rate falls to 3.4% – business live | Business