Hiring rebounded in April as economy added 211,000 jobs
Fed will likely see economy at full employment
The U.S. economy added 211,000 in April as hiring rebounded following a tepid 79,000-job gain in March. The April additions were enough to bring the unemployment rate down to 4.4 percent.
While the market will celebrate the topline gain, the most important development in this report was buried in the details, which showed that those facing involuntary part time employment for economic reasons declined to 5.27 million, below the long-term average of 5.4 million. This will not be lost on policymakers at the U.S. Federal Reserve who at this point are likely moving toward a judgment call that the U.S. economy is now at or below full employment.
Meanwhile, market participants will probably interpret this data as a reason to pass the tacos and tequila later today as they celebrate the Cinco de Mayo commercial holiday in the U.S. It would be wise not to over imbibe as the central bank may soon pull away the sangria. The April estimate of employment affirmed the Fed’s recent decision to look past the slowdown in first quarter growth, and the underlying detail in the jobs report, as well as the diffusion in hiring, all point toward a 25-basis point rate increase in June, with an additional 25 basis points later this year. We have made the case that if growth, like the April jobs data, rebounds or even accelerate, the central bank may even choose to add a third 25 basis point rate increase to the two it is already forecasting.
