The April jobs report showed that hiring moderately undershot expectations, as employers added 175,000 payroll positions, while the unemployment rate edged higher. After the jobs report, the S&P 500 extended overnight gains as Wall Street weighed its impact for Fed rate cuts.
The jobs report's soft tone was echoed by the Institute for Supply Management's survey index of service-sector businesses. The ISM services gauge slipped 2 points to 49.4 in April, falling below the neutral 50 level for the first time since December 2022. That's consistent with a slight contraction in activity.
Jobs Report Hits And Misses
The 175,000 overall employment gain missed Wall Street's 243,000 forecast, according to Econoday. Private-sector employers added 167,000 jobs, modestly trailing 190,000 forecasts. Government jobs rose by 8,000.
Hiring gains in February and March were revised down by a combined 22,000 jobs.
Average hourly earnings rose 0.2% in April, below 0.3% estimates. Twelve-month wage growth of 3.9% trailed 4% forecasts.
April jobs data was softer pretty much across the board. The length of the average workweek ticked down to 34.3 hours. Even with the moderate employment gains, the U.S. labor force clocked 0.1% fewer hours in April than in March.
The combination of a downtick in hours worked and tepid 0.2% growth in the average hourly wage means that aggregate weekly pay for the American labor force was flat last month.
Still, moderate April hiring still left a pretty strong three-month trend. In the February to April period, job gains averaged 242,000 per month overall, with a 197,000 average rise in the private sector. That's still too much for the Fed while inflation progress is stalling.
Household Survey
The headline job and wage figures come from the Labor Department's monthly survey of employers. The separate household survey details labor force participation, work status and the unemployment rate.
The household survey comes with a higher margin of error than the employer responses, so monthly changes should be taken with a grain of salt. However, the household survey has been known to lead the employer survey at economic turning points, so it shouldn't be ignored.
The unemployment rate ticked up to 3.9% vs. predictions of a steady 3.8% rate.
That came as the ranks of the employed rose by just 25,000. Meanwhile, the ranks of the unemployed increased by 63,000.
The number of people working part time for lack of full-time work or slack business conditions rose by 161,000 to 4.469 million. That's the highest since Jun 2021.
More Jobs Report Details
Health care and social assistance employment rose by 87,000, accounting for more than half of the 175,000 private-sector total. Economists consider that growth to be more secular than cyclical in nature.
Retailers added 20,000 jobs, while transportation and warehousing jobs rose by 22,000.
Outside of that, growth was muted. The leisure and hospitality sector added 5,000 jobs, manufacturers 8,000, and the construction industry 9,000.
Fed Rate Cut Odds
After the April jobs report, markets are pricing in 42% odds of a rate cut by the July 31 Fed meeting, up from 32% ahead of the jobs data, according to CME Group's FedWatch page. Odds of a rate cut by the Sept. 18 Fed meeting rose to 73% from 62%.
Odds of at least two quarter-point Fed rate cuts this year jumped to 66% from 52%.
S&P 500
The S&P 500 rose 1.1% after the jobs report in early Friday stock market action, as the 10-year Treasury yield slid 6 basis points to 4.51%.
On Thursday, the S&P 500 rose 0.9%, finding its footing after Wednesday's Fed meeting proved less hawkish than feared. The S&P 500 is still trying to regain key technical support at its 50-day moving average.
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