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April Jobs Won’t Change Minds

Summary:
The US created 211k net new jobs in April, a sharp bounce back from the downwardly revised 79k gain in March.  It is the third month this year that the US created more than 200k new jobs. United States Nonfarm payrolls Government payrolls increased by 17k.  As we noted with the Administration’s federal hiring freeze, the real growth in government employment is on the state and local level.  In April the federal government lost 6k workers while state and local governments added 23k. U.S. Nonfarm Payrolls, April 2017(see more posts on U.S. Nonfarm Payrolls, ) Source: Investing.com - Click to enlarge Participation Rate This seems largely a function of the decline in the participation rate.  It eased to 62.9% from 63.0%  This matches the low for the year so far set in January. U.S. Participation Rate, April 2017(see more posts on U.S. Participation Rate, ) Source: Investing.com - Click to enlarge Unemployment Rate The unemployment rate slipped to a new cyclical low of 4.4% from 4.5%.  U.S. Unemployment Rate, April 2017(see more posts on U.S. Unemployment Rate, ) Source: Investing.com - Click to enlarge Average Hourly Earnings Hourly earnings rose 0.3%, but the downward revision in March to 0.1% form 0.2%, means that the year-over-year rate eased to 2.

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The US created 211k net new jobs in April, a sharp bounce back from the downwardly revised 79k gain in March.  It is the third month this year that the US created more than 200k new jobs.

United States

Nonfarm payrolls

Government payrolls increased by 17k.  As we noted with the Administration’s federal hiring freeze, the real growth in government employment is on the state and local level.  In April the federal government lost 6k workers while state and local governments added 23k.

U.S. Nonfarm Payrolls, April 2017

(see more posts on U.S. Nonfarm Payrolls, )
April Jobs Won’t Change Minds

Source: Investing.com - Click to enlarge

Participation Rate

This seems largely a function of the decline in the participation rate.  It eased to 62.9% from 63.0%  This matches the low for the year so far set in January.

U.S. Participation Rate, April 2017

(see more posts on U.S. Participation Rate, )
April Jobs Won’t Change Minds

Source: Investing.com - Click to enlarge

Unemployment Rate

The unemployment rate slipped to a new cyclical low of 4.4% from 4.5%. 

U.S. Unemployment Rate, April 2017

(see more posts on U.S. Unemployment Rate, )
April Jobs Won’t Change Minds

Source: Investing.com - Click to enlarge

Average Hourly Earnings

Hourly earnings rose 0.3%, but the downward revision in March to 0.1% form 0.2%, means that the year-over-year rate eased to 2.5% from the initially reported 2.7% (and now revised to 2.6%).

The work week increased by 0.1% to 34.4 hours.  Although it does not sound like much, given the 150 mln employees, the gain in the work week is more than 400k full time equivalents.  This will likely impact output, income and consumption.  One unmitigated good news was that the underemployment rate (U-6) fell to 8.6% from 8.9%.  Last April it was at 9.7%.  It is the lowest since late 2007.

U.S. Average Hourly Earnings, April 2017

(see more posts on U.S. Average Earnings, )
April Jobs Won’t Change Minds

Source: Investing.com - Click to enlarge

 The data offers the Federal Reserve nearly instant support for its claim in Wednesday’s FOMC statement that the weakness in Q1 was likely driven by transitory factors.  The market upgraded the chances of a Fed hike in June and today’s employment data gives no reasons to have second thoughts.  Next week’s retail sales and CPI also are expected to support such views.

Canada

The decline in the unemployment rate fell to 6.5%, but this was a function of a fall in the participation rate.

Canada Employment Change, April 2017

(see more posts on Canada Employment Change, )
April Jobs Won’t Change Minds

Source: Investing.com - Click to enlarge

In contrast, Canada reported disappointing April job figures.  It created only 3.2k jobs.  There was a loss of  31.2k full time positions and a gains of 34.3k part time jobs.

Canada Unemployment Rate, April 2017

(see more posts on Canada Unemployment Rate, )
April Jobs Won’t Change Minds

Source: Investing.com - Click to enlarge

Canada Participation Rate

The Canadian participation rate fall to 65.6 (from 65.9%).  The cyclical low was last summer at 65.5%.

Canada Participation Rate, April 2017

(see more posts on Canada Participation Rate, )
April Jobs Won’t Change Minds

Source: Investing.com - Click to enlarge

Ahead of the second round of the French presidential election, the euro remains firm just below $1.10.  The dollar remains firm against the yen.  The US dollar stalled ahead of CAD1.38.   US interest rates are a bit softer after the employment data.  Several Fed officials will be speaking today, and Canada’s IVEY is still to come, and there are some large options expiring today.

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Marc Chandler
He has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks. After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.

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