Nonfarm payrolls increased by 428K in April (two-month revision -39K). The market expectation was 380K employment increase. While the unemployment rate remained stable at 3.6%, above the expectation of 3.5% (pre-pandemic rate was 3.5%, the Fed’s 2022 projection was 3.4%), the number of unemployed remained unchanged at 5.9 million.
If we look at the sub-items; Employment growth was widespread, led by gains in entertainment and accommodation, manufacturing, transportation and warehousing. Employment in the entertainment and hospitality industry increased by 78K in April. Manufacturing added 55K jobs in April. Financial activities added 35K jobs in April, led by an increase in insurance companies and related activities (+20K). Healthcare employment increased by 34K in April, reflecting the increase in outpatient healthcare (+28K). Retail employment increased by 29K in April. Mining added 9K jobs in April with an increase in oil and gas extraction (+5K). Average hourly earnings were up 0.3% from March and 5.5% from a year ago, with the previous month’s increase revised upwards from 0.3% to 0.5%. Average working time for all employees remained unchanged at 34.6 hours in April.
In terms of the Fed;
The fact that hourly earnings are below expectations stands out as a comforting detail for the Fed not to falter any further. It is a detail that will create an area of action in terms of guidance, which Powell says that the 75 bps possibility is not actively evaluated. On the other hand, the steady increase in employment in the warming environment of the economy will not reverse the path in terms of the continuation of the tightening in the broad route. It should be reminded that the contraction in the first quarter is heavily linked to Covid and is seen as temporary. But an active war with Russia and large-scale supply disruptions are significant risks. Wage pressure will still remain intense in the inflationary environment and will continue to pose an upside risk to the general level of prices.
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