It’s All About Jobs!
Written by: Steven Bouchey
The headline number is that the US added 164,000 new jobs for the month of April well below the 192,000 that economists were expecting. The unemployment rate fell to 3.9%, a level we haven’t seen since December 2000, after being stuck at 4.1% over the past six months.. The revisions for February and March were a net addition of 30,000 new jobs. Average earnings rose by .04 cents and wage growth was +2.6% over last year, not great but at least workers are being paid more and wages aren’t growing too fast, something the Fed watches closely. Another measurement of unemployment is where it includes those that had given up looking for work and it was at 7.8%, a level not seen since 2001.
The good news within this report is the low unemployment rate, although when you break it out, the amount of workers looking for work has dropped. This is better known as the Labor Participation Rate which is at 62.8%. April was the 91st consecutive month of jobs gains and the longest streak recorded. Since the late 1960’s, unemployment hasn’t been able to maintain the below 4% level for long. Normally when unemployment is this low, employers may be competing to hire workers by paying them more, but this time it seems different.
So maybe the Fed won’t have to raise rates more than initially expected, maybe only two more for the year rather than three. This is good news for the stock market as interest rates won’t be going up too fast too soon. With the Fed managing interest rate hikes delicately, corporate earnings as strong as they are, the fundamentals of the economy doing well, no recession on the radar screen and tensions with North Korea easing stocks are positioned for better times ahead.