NFP Climbs to 253k, Average Hourly Earnings Show Boost as Unemployment Dips

US Economy Adds 253K Jobs in April 2023

 

Job Growth in Professional and Business Services, Health Care, Leisure and Hospitality, and Social Assistance

 

The US economy added 253K jobs in April 2023, beating forecasts of 180K and following a downwardly revised 165K in March. According to the U.S. Bureau of Labor Statistics, employment continued to trend up in professional and business services, health care, leisure and hospitality, and social assistance.

 

Unemployment Rate Matches 50-Year Low

 

The unemployment rate, at 3.4 percent, and the number of unemployed persons, at 5.7 million, changed little in April. The unemployment rate has matched a 50-year low which was seen in January and has ranged from 3.4 percent to 3.7 percent since March 2022.

 

Wages Increase, Inflation Concerns Rise

 

Average hourly earnings, which remain a powerful inflation gauge for the Fed, increased by 0.5% MoM up from 0.3% in March, bringing the annual rate back to 4.4% from 4.3% previously. This print in particular doesn’t bode well for the Fed in the fight against inflation with two inflation reports ahead of next month’s FOMC meeting.

 

Federal Reserve and the Way Forward

 

The FOMC meeting didn’t disappoint this week while continuing stress among US Regional Banks weighs on sentiment and stokes recessionary fears. Fed Chair Powell for one said he doesn’t see a recession but rather miniscule growth for the US in 2023 even though some of his peers on the FOMC fear a recession is inevitable.

 

Fed’s Dream Scenario

 

The Fed’s dream scenario would ideally be that tighter credit conditions lead to a slowdown in the economy to put in a dent in inflation while at the same time seeing only a marginal uptick in the unemployment rate.

 

The Dollar Remains Vulnerable

 

The Dollar itself remains vulnerable as we hover near YTD lows. The ECB is expected to continue hiking with fellow central banks like the RBA striking a hawkish tone of late and markets unconvinced about the banking sector, the greenback could be in for a tough summer.

 

EUR/USD Falls from YTD Highs

 

Looking at the bigger picture, EUR/USD fell from YTD highs yesterday despite a hawkish tone from the ECB. The weekly timeframe was in overbought territory earlier in the week with the H4 timeframe printing a lower high yesterday. A push lower could be in store for EUR/USD but the 1.0900 handle may prove too strong a hurdle to overcome.