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Employment Finally Softening?

After waiting for a few years for employment to soften we have gotten data which MAY indicate that we are seeing either job losses or minimally a slowing in jobs being created. Of course a couple of numbers is not exactly a trend–but it is more than we have seen this year.

Last month (for April) we saw the smallest number of new jobs created this year with 175,000 new jobs versus forecasts of 240,000 and a giant sized number in March (315,000 revised). The unemployment rate rose to 3.9% from 3.8%. This was followed up this week with 1st time jobless claims spiking higher to 230,000 versus forecast of 214,000 and 209,000 the previous week

Obvious this is just one part of a larger puzzle–and I wouldn’t ever ‘hang my hat’ on a couple numbers—but apparently I am the only one as interest rates have moved lower–the 10 year treasury now at 4.46% and everyone is now back to forecasting 1 or 2 rate cuts yet this calendar year. Next week we have the CPI an PPI for April—these could drive numbers back up-or down. Being data dependent we will just have to wait and see.

This morning I see that CD rates on 3 month issues are down 5 basis points with the highest rate being offered at 5.3%. Honesty we just have to watch these rates and see if they hold up–they should until such point that we get rate cuts from the Fed. As long as rates are above 5% I will remain a buyer, but lower will drive me–and many others, heavily back to alternatives.

Today–nothing planned–buying or selling. But as I proved to myself earlier this week bargains could happen moving me to buy a little. We’ll see!!

2 thoughts on “Employment Finally Softening?”

  1. Watch out for relying too much on monthly employment data. On April 24, 2024 the BLS revised employment for private employers to a minus 192,000 for the third quarter of 2023. Other analysis has suggested that the vast majority of the increase in total jobs are either government jobs or represent part time or second jobs. This more pessimistic view of the jobs market seems consistent with recent surveys about the attitudes of consumers and small businesses.

    It has been suggested that the American economy is reliving the ‘Roaring Twenties’ of 100 years ago. Maybe for the Magnificent Seven crowd but it seems amazing that we are over full employment with a government throwing money around everywhere and consumers are in a funk?

  2. Tim,

    Generally, what we have been seeing is that when a couple quarters pass and revisions come in ( larger sampling groups finally respond ), the revised numbers go from positive to negative.

    I generally use these forward facing numbers for trading purposes, not macro economic direction because the revisions can dramatically change what actually really happened.

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