By
Dave Moenning on May 05, 2017 09:12 am
There
are several items in focus this morning including Warren Buffett's big meeting
(as well as his take on both IBM and Apple), the election in France on Sunday
(Macron continues to hold a 20-point lead - but strange things have been
happening at voting booths around the world lately), the latest move in oil
(don't look now, but oil was trading below $44 this morning based on supply
concerns - and remains something to watch), and of course, the Big Kahuna of
economic data - the Jobs Report.
The
latter is attracting most of the attention at the moment as job creation in
April rebounded from the surprisingly weak March reading. According to the Labor
Department, the U.S. economy created 211,000 jobs last month, which was above
the consensus expectation for 185,000.
Next,
the nation's official Unemployment Rate fell to 4.4%, which was down from
March's reading of 4.5% and two-tenths below analysts expectations of 4.6%. It
is worth noting that the current level is the lowest seen since May 2007.
However,
there are numerous ways to look at the rate of the unemployed. For example,
there is the now-popular U-6 rate, which includes those not actively looking for
jobs and folks looking for part-time work. The U-6 dropped to 8.6% in April,
which is down from the 8.9% level in March, and the best reading since November
2007.
Another
way to view unemployment is to take the number of employed people relative to
the population. This ratio rose to 60.2% in April, which is the highest level
seen since February 2009.
As
usual, there were revisions to the prior two months' job creation totals. March
was revised down to 79K from 98K while February's numbers went up to 232K from
219K.
On
the income front, Average Hourly Earnings rose by 0.3% in April to $26.19 per
hour and hourly wages grew by 2.5% on a year-over-year basis.
The
Takeaway
What
jumps out at me in this report is the "best reading since" numbers. For example,
the Unemployment Rate is the best since May 2007. The U-6 is the best since
November 2007. And the ratio of employed-to-population is the highest since
February 2009.
Thus,
it is fairly easy to argue that the jobs market has returned to levels seen
before the Great Recession. And as such, the Fed is justified in returning rates
to more normalized levels.
In
addition, it would appear that the Fed's view that the weakness seen in Q1 may
indeed have been "transitory" as hiring clearly perked up again after March's
hiccup. And from a big-picture standpoint, I believe the idea of the economy
rebounding from the usual late-winter swoon is critical to the current market
levels and trader narrative. Therefore, we need to continue to watch the
incoming data in May/June for signs of confirmation.
Thought
For The Day:
Remember
that it pays to be open minded (in more ways than
one)...
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