Jobs report: Strong hiring, unemployment checks Fed; The S&P 500 rose

Hiring firmed in April, with employers adding 253,000 payroll jobs, testing Wall Street’s resolve as the Federal Reserve raised interest rates for the last time and casting doubt on near-term cuts. The unemployment rate fell, matching its half-century low, while wage growth accelerated. However, S&P 500 futures rose in early stock market action on Friday after the jobs report helped. Apple (APL) revenue.


Jobs report successes and failures

The job gains were more than Wall Street’s forecast of 178,000. The private sector added 230,000 jobs, above the estimate of 153,000. Meanwhile, government employment increased by 23,000.

Average hourly wages rose 0.5% in the month, faster than the 0.3% forecast. Annual wage growth of 4.4% came in above expectations of 4.2%.

The unemployment rate fell to 3.4%, beating expectations for a rise of 3.6%.

Firm hiring gains in February and March were revised down by a combined 149,000 jobs, offsetting strong job gains in April.

The headline employment and wage statistics come from the Labor Department’s monthly survey of employers. A separate household survey describes labor force participation, employment status, and the unemployment rate.

Household survey data showed that the employed rose by 139,000 and the unemployed fell by 182,000 as 43,000 people left the labor force. The labor force participation rate, a measure of those working or actively looking for work as a share of the population 16 and over, was 62.6%.

S&P 500 reaction

With the S&P 500 up 1.3% following the jobs report, Wall Street can take some relief that a recession is not at hand.

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The 10-year Treasury yield rose 10 basis points to 3.45%.

On Thursday, the S&P 500 fell for a fourth straight session, down 0.7% to 4061. That’s just above key support at the S&P 500’s 50-day moving average.

S&P 500 stock valuations are supported by sinking Treasury yields as the bond market reflects a possible brush with recession. However, that could affect the earnings outlook, so any near-term strength for the stock could be fleeting.

At Thursday’s close, the S&P 500 had rallied 13.5% from its Oct. 12 bear-market low, but Jan. 3, 2022 is 15.3% below its all-time close.

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More jobs report details

Leisure and hospitality sector employment increased by 31,000. Health care and social assistance jobs increased by 64,200. Construction jobs rose by 15,000 and manufacturers added 11,000 workers.

One notable weak spot: Temporary help services lost 23,300 jobs.

With revisions for February and March, three-month average wage gains fell to 222,000 from 295,000, while private sector job gains fell to 182,000 from 223,000. This included a downward revision of private sector job gains in March to just 123,000 from the 189,000 first reported.

One aspect of the report raises some questions as to whether the force is overstated. Before seasonal adjustment, the 830,000 private jobs added in April trailed the 971,000 added in April 2022. However, adjusting for seasonal effects, the private sector’s 230,000 wage increase topped last year’s seasonally adjusted gain of 226,000.

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Also, adjustments for births of new firms and deaths of old ones added 378,000 jobs to the unadjusted total of 323,000 in April 2022 and 309,000 in April 2021. It is not known if that guess is on target at a time. Credit has tightened and the economic outlook has become uncertain.

Central Bank Policy Implications of Employment Report

With Wednesday’s policy statement, the central bank removed its bias toward further tightening. Markets are confirming that the Fed hike is over. Ahead of Friday’s jobs report, markets were pricing in 0% odds of a June 14 rate hike. At the September 20 Fed meeting, markets saw almost 90% odds for a rate cut.

After stronger-than-expected data, Chances of a June hike Although only 7.5% higher. Meanwhile, the odds of a September rate cut fell to around 75%.

A rate cut won’t happen until the banking crisis escalates, a clear rise in unemployment and wage growth cools, allowing inflation to come down faster than expected.

Friday’s jobs report, with low unemployment and brisk wage growth, certainly didn’t hasten the timing of the Fed’s first rate cut.

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