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  • Writer's pictureRealFacts Editorial Team

April Jobs Report Data Comes in Cold

The job market in April was slower than anticipated, new jobs created was 175,000 (a six-month low) instead of the anticipated 240,000, unemployment rose to 3.9% from 3.8%, and wages only rose 0.2%.

April Jobs report graphs

These numbers seem to be indicating a slight cooling-off in the labor market, however, these numbers should be interpreted in context. The labor market has been rather hot to start 2024, each month has created an average of 246,000 new jobs. So, although April’s data was a little slower, the trend still seems to be hot right now. Optimistic market participants have taken this data to indicate that the potential for a rate cut this year is higher than inflation data has been indicating.

Steve Rick, chief economist at TruStage, wrote, “This month’s slower jobs report, coupled with last week’s weaker than expected GDP report, is a sign for the Fed that the labor market and economy are finally feeling the effects of the aggressive interest rate hike cycle from 2023. We are hopeful that this purposeful slowdown will encourage the Fed to move forward with their plans for two rate cuts this year." In addition to this, Paul Ashworth, economist at Capital Economics, wrote, "April’s employment report was weaker across the board; with employment growth slowing back to the pace from last fall, the unemployment rate ticking up to 3.9% and average hourly earnings growth dipping below 4% [year over year]. In short, don’t rule out rate cuts this year entirely."

The market reacted positively after receiving April's jobs report, the Dow Jones Industrial Average was up 1.2%, the S&P 500 rose 1.3%, and the Nasdaq jumped 2% higher. April jobs data indicated a cooling in the economy, Jeffrey Roach, Chief Economist at LPL Financial, explained why a cooling economy is good for the market, “The demand for labor is slowing which will eventually ease inflation pressures, giving the Fed some leeway to cut rates later this year. Slower payroll growth and fewer hours worked imply the economy is slowing at a measured pace. This job report is consistent with the soft landing narrative.”

The April report gave the market hope that the economy and inflation will cool, allowing the Fed to finally begin cutting rates. The CME FedWatch tool raised the percentage odds of a rate cut by September to 68.3% from 61.6%. The data is a good sign, but we are still a good ways away from the Fed being able to cut rates. The Fed’s goal is inflation of 2%, currently inflation is at roughly 3.5%.

Most Market Analysts Are Bullish on The Market

Last month (April) the market experienced a roughly 5% correction as tough inflation reduced the high levels of optimism. Many analysts and economists see the current pullback as “healthy” and short term breather before the market continues to trend higher. The pie graph shows the positions from the Big Money poll of financial professionals:

Investment Outlook after the April jobs report

Mike Bailey, director of research at FBB Capital Partners, wrote, “Investors got lulled into complacency. The market got slapped in the face, and it feels ugly and painful, but things are getting back to normal now. Five-percent pullbacks are part of the game. I’m not sensing a major change in the markets and economy.” So most of the street and the larger market participants are anticipating resumed growth after this current correction.

While reporting on the forecasts of the people in this poll, Paul R. La Monica of Barron’s wrote, “The Big Money bulls forecast that the Dow Jones industrials will end 2024 at about 41,231, 9% higher than current levels. Market optimists had a mean forecast of 5461 for the S&P 500 index and 17,143 for the Nasdaq —up 9% and 10%, respectively, from where the indexes were trading on May 1.”

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