The April performance of the U.S. labor market missed expectations, providing some evidence of cooling economic momentum and potentially leaving the door open for interest rate reductions later this year.
U.S. employers added 175,000 nonfarm payrolls in April, marking a reduction from the upwardly revised 315,000 reading in March and missing the expected 238,000, the Bureau of Labor Statistics said Friday.
April Jobs Report: Key Highlights
Nonfarm payrolls increased by 175,000 on the month, marking a slowdown from March's 315,000 and falling short of economists' expectations for a 238,000 increase.
The unemployment rate went from 3.8% to 3.9%, more than the expected 3.8%.
Average hourly earnings edged down from 4.1% to 3.9% compared to April 2023, falling more than the expected dip to 4%.
On a monthly basis, hourly earnings advanced at a 0.2% pace, decelerating from the both the previous and expected 0.3%.
Measure
April 2024
Estimate
March 2024
Nonfarm payrolls
175,000
238,000
315,000 (revised up from 303,000)
Unemployment rate
3.9%
3.8%
3.8%
Wage growth (YoY)
3.9%
4.0%
4.1%
Market Reactions
The surprisingly cooler jobs report suggests looser labor market conditions in the U.S. economy, renewing investor optimism for potential interest rate cuts later this year.
Consequently, Treasury yields dropped across the board immediately after the report, reflecting investor expectations of forthcoming rate reductions. The two-year yield, which is sensitive to policy changes, slipped from 4.86% to 4.72%.
The U.S. dollar index (DXY), tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP), declined by 0.7%.
Futures on U.S. major averages trended higher during premarket trading on Friday. Contracts on the S&P 500 were 0.4% higher at 8:40 a.m., while Nasdaq 100 futures rose 0.5%.
On Thursday, the SPDR S&P 500 ETF Trust (NYSE:SPY) closed 0.9% higher.
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