• April nonfarm payrolls rose 177 thousand, easily beating the 133 thousand expected and 185 thousand in March (revised down from an initial 228 thousand).  The average monthly gain over the last 12 months is 152 thousand, so April was slightly better than the average. Speaking of revisions, February was revised down by 15 thousand jobs bringing the two-month revisions to down 58 thousand. Private sector job growth was solid at 167 thousand which was well clear of 118 thousand expected and above the downwardly revised 170 thousand in March and ADP’s 62 thousand reported earlier this week. As we seem to say every month, the monthly revisions are generally to the downside which has been an ongoing theme for more than a year now.

 

  • Job gains were strongest in healthcare/social assistance, a perennially strong category, (51k). Other categories showing decent gains were transportation/warehousing (29k), leisure/hospitality (24k), financial (14k), construction (11k), and government (10k). Modest job losses were concentrated in motor vehicle and parts (-5k), and retail trade (-2k) (see graph below).   It’s easy to see the strength in service sector hiring vs. the goods side of the economy and that is what we’ve been seeing across a host of reports with services really carrying the economy and that continues to be the case.

 

  • The Household Survey, which is smaller in size than the Establishment Survey and then extrapolated across population totals, generates the unemployment rate, labor force participation rate, etc.. The survey reported 436 thousand new jobs and an 82 thousand increase in unemployed persons. Total unemployed increased from 6.492 million a year ago to 7.165 million in April, an increase of 673 thousand. The survey also reported a solid 518 thousand increase in the labor force. The slight increase in unemployed was offset by the increase in the labor force such that the unemployment rate stayed unchanged at 4.2% (4.187% unrounded) matching the 4.2% expectation and March’s result. With the increase in the labor force, the Labor Force Participation Rate increased one-tenth to 62.6%, beating the 62.5% expectation and March result. The participation rate has been range bound for quite some time, for instance, it was 62.7% a year ago. In any event, the uptick in the participation rate is always welcome news at the Fed.

 

  • The Underemployment Rate (unemployed plus part-time but wanting full-time, and those wanting work and having looked at some point in the last year) decreased from 7.9% to 7.8% (see graph below).  That level peaked at 23% back in April 2020. It bottomed at 6.6% a couple times back in 2022, just as the Fed was beginning its rate-hiking cycle. It wouldn’t surprise us to see this climb in the months ahead given the slower growth posture of the economy, but for April that didn’t happen.

 

  • Average Hourly Earnings rose 0.2% (0.167% unrounded) MoM, missing the 0.3% expectation and missing the March gain of 0.3% (0.279% unrounded).   The year-over-year pace decreased a tenth to 3.8%, (3.770% unrounded) missing the 3.9% expectation (see graph below). Average weekly hours remained at 34.3 hours, after a one-tenth upward revision to March, and better than the 34.2 expectation. A tenth of an hour may not sound like much but with 163 million full-time workers each tenth of an hour is just over $1 billion in wages.

 

  • April’s jobs report was expected to soften, but continue to reflect resilience, and that’s what we received. However, with the ongoing tariff uncertainty this report could be the last before we see unequivocal weakening brought on by fluid trade policies. The weekly jobless claims series did increase from 223 thousand to 241 thousand last week, but that is still historically a benign level, and the Challenger Job Cuts release found less job cut announcements in April (105,441) than they did in March (275,240). With the shadow of tariff wars continuing to hang over global markets, the fear is the somewhat hesitant consumer could hunker down more, but as long as decent job growth continues, and wage gains remain within recent trends, the worst-case scenario that the consumer shuts down should be avoided. If one was looking for the beginnings of weakness from tariff uncertainties, this was not that report. Given the survey period was the week of April 12, it perhaps was a bit too early to expect that type of fall off. The primary risk remains that the labor market eventually weakens as uncertainty over trade policies remains the primary business story. In summary, this report won’t move the Fed off their rate-cutting pause which puts into question a mid-year rate cut that futures were predicting.   

 

  • Shifting gears, in the week ending April 26, the initial jobless claims totaled 241 thousand, an increase of 18 thousand from the previous week’s revised level of 223 thousand. The continuing claims figure for the week ending April 19 was 1.916 million, an increase of 83 thousand from the previous week’s revised level of 1.833 million. While those numbers did move higher, the Challenger Job Cuts Survey posted a large decrease in April, albeit from a March total that was the largest for planned cuts since April/May 2020.

 

  • The ISM’s Manufacturing Index for April disappointed at 48.7 from 49.0 a month earlier. Expectations were for a larger dip to 48.0, so slightly better than expected but still in contraction territory. The sub-indices were not much better. The index of employment ticked up to 46.5 from 44.7, but still in contraction territory.  The Prices Paid Index registered 69.8% in April, a 0.4-percentage point increase from March’s 69.4% reading, a fifth consecutive reading above 60%.  Meanwhile, the New Orders Index recorded a reading of 47.2% in April, 2.0 percentage points higher than the March figure of 45.2%The best one can say about these results is they don’t reflect greater deterioration from March, but certainly no indication that a recovery is happening.

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Published: 05/02/25 Author: Thomas R. Fitzgerald