The US economy added 263,000 jobs in April when unemployment dropped to 3.6%, half a century low, the Ministry of Labor reported Friday. The headline job figures looked so strong, but the job report looked rather miserable beneath the surface. Wage growth came in on the soft side for another straight month, although workers managed fewer hours. So why did Dow Jones and the broader stock market rise to modest stock market gains after the April job report?
Wall Street may have rejected the bad news as a likely statistical quirk. Otherwise, investors celebrated the non-for-heat report as inviting to Goldilocks – and a dovish Fed.
The bottom line of any job report is the overall change in weekly pay. The fact that net employment, average hourly wage growth and the change in total hours worked over the economy. In April, the total weekly wage settlement increased by only 0.1%, corresponding to the lava since the end of 2016. However, official data indicate that this was not just a month's blip: The annual change in weekly wages fell to 4.9%. It corresponds to the weakest growth in a year and is half a percentage point from average growth in the second half of 2018.
Has job growth slowed?
The private sector added 236,000 jobs. It is the number to be recorded in the coming months as the government ramps up the employment of the ten-year census.
Wall Street economists expected 180,000 new jobs, including 178,000 in the private sector. The consensus forecast required 3.8% unemployment and 3.3% average hourly wage growth.
After a combined 16,000 upward revision of employment gains in March and April, the economy had an average solid 169,000 new jobs per month over the past three months. But the monthly pace of the private sector has gone up to 154,000.
In April, the private sector increased 33,000 construction work and 202,000 service jobs. But there were two weak spots. Car manufacturers threw 1,500 jobs, while dealers cut 12,000.
The economy still places more than enough jobs for new labor market participants, which allows more decline in unemployment. But it looks like job growth is slowing down. Yet three months are too short for a period to come to any conclusions. Keep in mind that the economy added 300,000 jobs during a mild January, which contributed to February's weak prints.
Blame Soft Wage Growth On The Calendar?
Ian Shepherdson, chief economist at Pantheon Economics, suggested that the soft pay growth of the job report should not be taken at face value. He noted that the survey week did not include the 15th and April had an extra working day. "When both quirks come in the same month, AHE (average hourly wage) tends to be depressed," Shepherson tweeted .
Nevertheless, the shorter average work week that went down to 34.4 hours does not explain
Nevertheless, it is best not to do too much of a month's data.
Dow Jones and treasury Yield Reaction
On Friday, stock market trading rose Dow Jones by 0.4%, S & P 500 0.6% and Nasdaq composite 1.1%, close to height. The 10-year dividend, which increased to 2.56% ahead of the report, dropped to 2.52% after the data.
The bond market appeared to be decisive for the soft pay and working hours data, and the shares took their cue from the bond market. Slow job growth, if it continues and inflation stays silent, may increase the odds of a Fed rate cut later this year.
Wage growth, the labor market Slack Key To Outlook
Wage growth has not shown any signs of rental. After Amazon (AMZN) hiked its minimum wage to $ 15 an hour from November, Costco (COST) followed in March. Target (TGT) increased their minimum wage to $ 13 an hour, up from $ 12.
Now that the tax cut increase to consumer income has begun to fade, a key issue is whether companies will slowly employ. It depends in part on whether employers can attract sidelined workers back to the labor market. For example, McDonalds (MCD) along with AARP as it gets older is helping fill 250,000 summer jobs.
Rapid productivity growth can also help maintain higher wage growth, as workers' production increases. On Thursday, the Ministry of Labor reported that productivity increased by 2.7% from the year before in the first quarter, the biggest jump since 2010. It is not yet clear whether it is a blip or higher productivity, is here to live.
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