May 11, 2023

WEEKLY MARKET COMMENTARY | MAY 11, 2023

The Markets 

The labor market just keeps growing…and growing…

Last week, the April employment report for the United States arrived. It showed that unemployment dropped to the lowest level in more than 50 years – 3.4 percent. Other highlights included:

  • The creation of 253,000 jobs in April. That was well above consensus estimates, according to Catarina Saraiva and Steve Matthews of Bloomberg. 
  • The highest workforce participation rate since 2008. This is the percentage of Americans who are either working or looking for a job, reported Megan Cassella of Barron’s.
  • The lowest unemployment rate for black workers ever. By race, the April unemployment rate was 2.8 percent for Asian Americans, 3.1 percent for white Americans, 4.4 percent for Hispanic Americans, and 4.7 percent for Black Americans.
  • Average hourly earnings rose 4.4 percent year-over-year. Wage growth may be one reason inflation remains higher than the Federal Reserve would prefer, according to a source cited by Bloomberg.

There were signs that the labor market growth might be slowing down. The number of jobs created in February and March were both revised lower.

The Federal Reserve will be weighing the strengths and weaknesses of the labor market, as well as other data, as it makes future rate hike determinations. Last week, the Fed raised the federal funds rate from 4.83 percent to 5.08 percent, and Chair Powell suggested it could be the end of the tightening cycle, reported Jeff Cox of CNBC

“As the Federal Reserve works to rein in inflation, the labor market’s confounding durability has given central-bank officials space so far to keep interest rates in restrictive territory without having to worry about widespread layoffs or acute economic pain,” reported Barron’s.

Last week, major U.S. stock indices finished the week with mixed performance, reported Barron’s. Yields on most U.S. Treasuries moved lower over the week.

Sources:

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