A weaker jobs report excites Wall Street, and still looks good vs the Trump years.

Hey, it’s jobs Friday! What did we get?

JUST IN: The US economy added a net 175,000 jobs in April — a solid gain, but below expectations of ~250k. Healthcare was the big sector hiring.

Unemployment rate: 3.9% —> The unemployment rate has been below 4% for 27 months. That hasn’t happened since 1967-70.

Wages: +3.9% in… pic.twitter.com/RKYy1orroq

— Heather Long (@byHeatherLong) May 3, 2024

175,000 job gains in April. Healthcare led the hiring.

Healthcare +56,000
Social aid +31,000
Retail +20,000
Wholesale trade +10,000
Construction +9,000
Warehouse +8,000
Manufacturing +8,000
Gov't +8,000
Hospitality +5,000

Temp help -16,000 -->Temp help is -185k in past yr… pic.twitter.com/IU65mHRqhq

— Heather Long (@byHeatherLong) May 3, 2024

Lotta “meh” with this report. The 175,000 jobs added is the lowest monthly gain since October and the 3rd lowest since 2022. The 0.2% increase in April’s hourly wages follows a downward-revised 0.1% increase in February, and a 0.3% increase in March, and accounts for the lowest three-month run since President Biden’s first three months in office in early 2021. Which makes all of the panic we had earlier in the week about a 1.1% increase in Q1 wages look even more foolish

In addition to the slowing wage growth, my other main concerns with the report is that nearly half of the gains were concentrated in health care and social assistance (+87,000), and construction only added a seasonally-adjusted 9,000 jobs instead of the 23,000-a-month pace that we’d seen in the 12 months before April 2024. With the construction numbers, I wonder if that slowdown corresponds with a slowdown in sector spending for March, or if warm weather simply pulled forward some seasonal hiring that usually would happen in April (March was up 40,000, so it's on trend if you average the two months).

On the flips side, if you want the Fed to cut interest rates sooner than later, but still want the economy to keep growing, this is exactly the type of report you’d be looking for. Wage growth slowing but still continuing, in the same April where gas prices leveled off and oil futures fell to their lowest levels in 6 weeks. None of that indicates inflation should continue at the elevated level we saw in Q1, which means the 2-3% annual rate we were seeing for much of 2023 should resume.

The jobs report’s reporting of tamer wage growth caused the yield on the 2-year bond to drop by nearly 0.2% today. And the prospect of lower inflation giving space for interest rate cuts got traders to buy up stocks, reversing all of the sizable losses from earlier in the week.

Stock Market #StockMarket today: #stocks surge as jobs report revives rate-cut bets, Apple jumps 6% - Yahoo Finance https://t.co/jsfPFirlbm

— Stock Market News (@Stock_Market_Pr) May 3, 2024

US stocks surged on Friday as upbeat earnings from Apple (AAPL) lifted spirits and a weaker-than-expected jobs report revived bets that the Federal Reserve could cut interest rates sooner than thought.

The Dow Jones Industrial Average (^DJI) jumped 1.2%, or about 450 points, while the S&P 500 (^GSPC) rose 1.3%. The tech-heavy Nasdaq Composite (^IXIC) increased 2%....

The report pushed up bets on a sooner-than-expected rate cut from the Fed. According to the CME FedWatch tool, traders see a roughly two-thirds chance of a rate cut in September.

But even though the jobs numbers were lower than what we've been used to or what the "experts" were expecting, it's still a good report if we compare it to the pre-COVID times. Half of the 18 months from June 2018 to the end of 2019 had job growth lower than 175,000. (You know, the times that Trump claims was “the best economy ever”.) And 12-month job gains averaged less than 175,000 a month for an entire year between early 2019 and early 2020, before the COVID pandemic would hit the economy and jobs market full force.

So while it's not the blowout numbers that we saw in the first three months of the year, 175,000 jobs and 0.2% wage growth would be considered a pretty good jobs report before the 2020s. And while job growth likely will continue to soften from the strong pace of Q1 2024, staying below 4% unemployment is still a great place to be in Spring 2024.

We will need more data from April to see if other parts of the economy go along with this slower hiring in that month, or if output and spending kept rolling along. And we will need to see inflation figures over the next couple of weeks to see if we might get back toward real wage growth, or if wage growth has failed to exceed inflation for a third straight month. If it’s the latter case, then we have an economic concern that’s worthy of paying attention to, because that's a real reason for American consumers to be gloomy, as opposed to complaining about inflation that seems to be heading back down.

Things are generally good, and we are still at/near full employment. And just because MAGAs might want to believe things are bad, that doesn't make it true in the Real America.