April NFP = +160,000

The government said that the economy created 160,000 net new jobs last month. That was below expectations of 200,000. Revisions sliced off 19,000 from the numbers for February and March. The unemployment rate stayed at 5%.

While a downshift, the still-healthy pace of hiring contrasts with other economic signals that have been decidedly mixed recently. Late last month, for example, the government reported that the economy barely expanded in the first quarter.

But most experts say the steady gains in the labor market in recent months are a more reliable sign, suggesting that the economy should continue to expand for the rest of 2016, with the pace picking up modestly from the stagnant opening period.

“This isn’t a sign of real weakness,” Diane Swonk, an independent economist in Chicago, said of Friday’s report. “The quality of the jobs improved but the quantity did not,” she added, pointing to a strong gain of 67,000 jobs in the business and professional services category.

The jobs-to-population ratio declined slightly last month after rising for six straight months. Splitting out the decimals, April’s unemployment rate was 4.984%. It’s lower now than it was for every month from January 1974 until April 1997.

To have the same jobs-to-population ratio as 16 years ago, we’d need 12.78 million more jobs. Or we could have the same number of jobs but 19.74 million fewer people.

There are now 101.965 million Americans who are either unemployed or out of the labor force entirely. We haven’t made a new low in the unemployment rate in two months. There hasn’t been a three-month streak in nearly five years.

In April, average hourly earnings rose by 0.3% which is pretty good. Over the last year, AHE is up 2.5%. In April, the labor force participation rate fell to 62.8% from 63% in March.

The bond market has basically shelved the idea of rate hikes coming anytime soon. Yesterday, the futures market thought there was a 43.1% chance the Fed would hike in November. Today that’s down to 38.2%. Notice the drop in the two-year yield:

Posted by Eddy Elfenbein on May 6th, 2016 at 9:54 am

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