What recession?
Another solid jobs report may complicate things for the Federal Reserve and investors.
The US labor market is still in (cue your best Larry David “Curb Your Enthusiasm” voice) pretty pretty pretty good shape. The economy added 253,000 jobs in April, more than economists expected. The unemployment rate remained at 3.4%. Experts were forecasting that it would rise to 3.6%. Wage growth also failed to cool off, rising 4.4% over the past 12 months.
This may make the Federal Reserve’s job more difficult. Fed chair Jerome Powell hinted earlier this week that the central bank may finally be about to pause its monetary tightening after a series of interest rate hikes. But with recession alarm bells fading slightly and inflation not yet out of the picture, will Powell & Co. decide to keep raising rates?
Perhaps. But dig deeper in the jobs report and there are some signs of weakness. The revisions for February and March were not good. The government said that 149,000 fewer jobs were added in those two months than originally reported.
That may be one of the main reasons why traders are still pricing in a 97% likelihood that the Fed will keep rates at a range of 5% to 5.25% at its next meeting in June.
Of course, that meeting is 40 days away. So we’ll get several inflation prints as well as another jobs report before the Fed decision. A lot can change in that time. So don’t count your doves before they hatch. (That’s a saying, right? Heh.) Another hawk may still emerge from the central bank nest next month.