US non-farm payrolls exceed expectations suggesting jobs market in good shape
US non-farm payrolls gained a healthy 428K in April, data revealed today, compared to a consensus expectation of 380K, matching the March figure which was revised to 428K. The unemployment rate was unchanged at 3.6%, with consensus expectations forecasting 3.5%.
Rob Clarry, Investment Strategist at wealth manager Tilney Smith & Williamson, says there are two key takeaways from today’s job report:
“First, the US economy continues to add jobs at a robust pace, indicating growing tightness in the labour market.
“There remain more job openings than people looking for work, which should keep upward pressure on wages in near term. This will provide support to the US economy and consumption, which ─ despite the Q1 GDP contraction ─ has been relatively strong. In a week when the US Federal Reserve hiked its benchmark interest rate by 50 basis points, the labour market data supports the view that the real economy can withstand the gradual rate rises pencilled in for this year.
“Second, the outlook for the labour market will largely depend on how many people return to the workforce. Despite the healthy-looking unemployment rate, the labour force participation rate of 62.2% remains below the pre-pandemic level of 63.4%. With public health improving, plenty of job openings and higher wages, companies will be hoping that more people return to employment to alleviate some of the tightness we are seeing.
“This would also help to reduce inflationary pressures and the probability of a wage-price spiral rearing its ugly head.”
