The April jobs report is due out at 8:30 a.m. ET on Friday and is expected to show a continued slowdown in the labor market.
Non-farm payrolls for April are expected to rise by 180,000 while the unemployment rate is expected to reach 3.6%. In March, the US economy added 236,000 jobs while the unemployment rate fell to 3.5%.
Here are the key numbers Wall Street will be looking for, according to data from Bloomberg:
Non-agricultural payroll: +180,000
Unemployment rate: 3.6%
Average hourly earnings, month after month: +0.3%
Average hourly compensation, year-on-year: +4.2%
Average weekly hours worked: 34.4
Friday’s jobs report comes after the Federal Reserve voted this week to raise its benchmark interest rate an additional 0.25%, taking the fed funds rate above 5% for the first time. since September 2007.
In raising rates on Wednesday, Fed Chairman Jay Powell said the labor market remained “very tight” but noted “there are signs that supply and demand in the labor market return to a better balance,” indicating an increase in participation among prime-age workers (those aged 25 to 54), as well as moderation in wage gains and a decline in job vacancies.
“But overall,” Powell added, “the demand for labor still far exceeds the supply of available workers.”
Friday’s government payroll number also follows ADP data released Wednesday morning that suggested private sector hiring was much stronger in April than expected.
The ADP report showed that 296,000 jobs were added in the private sector, an increase from March’s gain of 142,000 jobs and nearly double the forecast of a 150,000 job increase.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, however, noted on Wednesday that “ADP has underestimated official payroll figures in six of the last eight months since the introduction of its new methodology, and the two times that he overestimated the payroll, the error was very small. … The surprisingly high April figure could then mark the start of the catch-up.”
And while investors remain focused on regional banking sector turmoil, no impact is expected to show in employment data.
In a note ahead of Friday’s report, Preston Mui, an economist at Employ America, wrote that “recent data point to a slowdown in payroll growth in April.”
“JOLTS data for March showed a cooling in the labor market across multiple indicators, with quits down and layoffs up,” Mui added. “The total number of layoffs in March was the highest for any month since 2020. Meanwhile, continuing claims and initial claims have not decreased from their recent increase.”
As with any jobs report, the central question for investors will be how this data influences the Fed’s next move, especially given how forcefully Powell has emphasized the central bank’s need to be. dependent on data in the coming months after removing language on its “anticipation”. of future rate increases.
“Amid signs that labor market conditions are already cooling, this should in turn contribute to a faster decline in underlying inflation than officials expect,” Andrew Hunter, economist in charge of economics, wrote on Wednesday. Deputy Head of the United States at Capital Economics, in a note to clients.
“Overall, we still think the Fed’s next move will be an interest rate cut later this year, potentially as early as September’s FOMC meeting, with rates eventually falling even more sharply than markets anticipate it.”
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