A reasonably strong report.
Nonfarm payrolls increased by 115,000 for April, above market estimates of about 50,000. Upward revisions for March we modestly offset by downward revisions for February. The three-month average of employment changes is 48,000 — pretty close to most estimates of trend job growth. Negatively, the labor force participation rate slipped further to 61.8 percent. Additionally, average hourly earnings rose by only 0.2 percent — below the inflation rate.
The smaller and more volatile household survey showed that the U-3 unemployment rate was unchanged at 4.3 percent, while the broader U-6 rate (including measures of underemployment) jumped to 8.2 percent. This was 7.9 percent two months ago. Both the U-3 and U-6 unemployment rates are historically low.
The job market continues to move ahead at trend rates or better, with unemployment remaining low. Given the current demographic and immigration situations, nonfarm payroll gains averaging around 50,000 per month and unemployment in the low-4 percent range should be expected. There is little in today's report that would spur the Fed to ease in the near-term. And given the pickup in inflation (much driven by energy prices), the past two months of above-trend payroll gains could tilt the odds more toward tightening by the Fed rather than easing. Most likely, however, is unchanged Fed policy in the near term as monetary policy makers wait to see if events in the Middle East allow energy prices to move lower and the extent to which higher energy prices feed into other parts of the economy. Certainly, the job market data don't suggest the need for Fed easing.
David W. Berson, Ph.D., CBE
Chief Economist
Feedback |Bio
Sign up for our Market Commentaries
Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.
Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.
