In The Know – May 3, 2024

On the employment front, we got several different reports. ADP reported on Wednesday. And ADP is a payroll company and they do payroll for about a million different businesses.

They get real-time data that they report every month. So on Wednesday, they reported that private businesses in the United States added 192,000 workers to their payrolls in April of 2024. Now, 192,000 was a good bit more than the 175,000 increase that was expected. And less than the 208,000 that they got last month. And they did report that hiring was pretty broad-based amongst the different sectors. 

They also report the changes in pay that job stayers get versus people who change jobs. Job stayers pay was at 5% year over year in April. That was a little changed from the previous month. And job changers got a 9.3% raise if they switched to a different company. That was less than March at 10.1%. They also mentioned in their report that the resilient overall U.S. labor market and the fact that their clients continue to add to their workforce at a moderate pace.

The JOLTS report came out on Wednesday. So this is that reports the number of job openings, layoffs, turnover and so on and so forth. So the number of job openings declined by 325,000 from the previous month. We now have 8.488 million open jobs in the US. The decreases were noted in construction, finance and insurance. Increases, state and local government hiring. Of course we can count on the government to keep hiring those people. The number of job quits in the US also decreased by 198,000 from the previous month to 3.329 million in March of 2024. 

This suggests that Americans may have less confidence in their ability to secure other positions in the current market and may indicate a smaller wage premium for those seeking to switch jobs, said the U.S. Bureau of Labor and Statistics.

Yesterday we got the initial claims. They remain low at 208,000, 3000 below expectations and unchanged from the week before. Continuing claims at 1.774. 16,000 under the estimate and also unchanged from the week before. 

The April jobs report came out this morning. That’s the big one at the beginning of the month that all eyes are on. It came in pretty decent. So the pre-markets were positive in advance of the release. And the last time I looked, they were very positive after the report. So they reported 175,000 new jobs were added in April. That is far less than the 250,000 that were expected, but still enough to keep the markets positive. So there was a 22,000 revision to the negative over the last two months. So this continues that trend of government reporting the numbers and then coming back, kind of under the radar, and revised those numbers being revised downward.

The unemployment rate was expected to come in at 3.8%. It came in at 3.9%, so it ticked up 0.1%. 

Average hourly earnings were up 0.2%, lower than was expected year over year. We have average hourly earnings up 3.9%.

The time that people are spending unemployed has not increased yet. So that is a pretty decent thing. But job hunting for those who get laid off could be increasing as we see the labor market start to cool off.

So far this year, employers have announced plans to hire over 46,000 workers. Sounds great, but it’s the lowest total in the first four months of the year since 2016. So we have hiring slowing. Quits have slowed, too, because people are not as confident that they can find unemployment. 

And then, of course, the other big news of the week is that the Federal Reserve had their two day meeting, and as widely anticipated, they announced that the interest rate, the Fed funds rate, would remain unchanged at five and a quarter to five and a half percent. So it has, for the last year, it has remained unchanged.

They also made some comments about inflationary pressures and the tight labor market, indicating that they have kind of stalled out in bringing inflation back down to its 2% target. The Fed, interestingly enough, also indicated that they would be reducing the speed of its quantitative tightening starting from June 1. So lots of moving parts that the Fed has a dual mandate to keep price stability, which means keeping inflation from getting out of control and unemployment stable.

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