Futures report outranks jobs report
US stocks recovered Friday, ahead of the employment report. After a tough day on Wall Street yesterday as concerns grew about the stability of the banking sector.
After the market closed on Thursday, the Dow Jones Industrial Average turned negative for this year. It was down 0.06%.
After the bank announced Thursday that it is exploring strategic options, shares of PacWest Bancorp plummeted 50.6%. First Horizon Bank's shares fell 33.2% following the cancellation of a $13 billion merger between the company and TD Bank that would have created America's sixth largest bank.
Western Alliance Bank dropped 38.5% following reports that the bank was exploring a possible sale. Western Alliance has denied these reports.
This week, mortgage rates dropped after two weeks of gains. Recent data indicates that rates are still volatile.
Dow futures rose 150 points or 0.4% in the morning on Friday, while S&P futures rose by 0.6% and Nasdaq's futures increased by 0.6%.
13 min ago
What does Fed chair Jerome Powell think about the labor market?
Federal Reserve Chair Jerome Powell is optimistic that he can bring down inflation without harming the job market.
Powell, at a press conference on Wednesday following the two-day meeting of the central banks monetary policy committee, said: "We have raised rates by five percentage points in just 14 months and the unemployment rate has dropped to 3.5%. It is almost where it was, or even lower, when we began."
He said that job openings are still high - JOLTS revealed there were 1.6 jobs available for every job seeker - and there is evidence of a gradual cooling on the labor market.
Powell stated that it was not possible to have job openings decline so much without the unemployment rate increasing.
He said: "It is possible to continue a cooling on the labor market, without the large increases in unemployment which have been associated with previous episodes." "And this would be against the history." "I fully understand that would be against history."
He said: "It is still possible to avoid a recession. In my opinion, this is more likely than having a real recession." "I don't exclude the possibility of a recession. It is possible that it will be mild."
13 min ago
Wild card ADP
ADP's look at the private sector's employment, released just two days before BLS's employment report, can be viewed as a prelude to what the federal data will reveal.
The April ADP report may surprise both the markets and economists. According to the ADP National Employment Report released on Wednesday, private-sector companies added 296,000 new jobs in April. This was more than double the 142,000 that had been predicted by economists.
ADP's reports don't always match the official federal report. BLS' private sector payroll gains in January were three times higher than ADP.
Michael Feroli's note from Wednesday said that ADP's recent track record of predicting BLS payrolls is not very reliable. Yesterday's JOLTS numbers pointed to a downside risk in Friday's nonfarm employment report. Today's ADP figure argues against this.
13 min ago
What rising unemployment rates mean
According to Refinitiv, economists expect the unemployment rate to increase to 3.6%. The unemployment rate would still hover around historically low levels.
Nick Bunker is the director of economic research at Indeed Hiring Lab. He plans to look into the unemployment rates, and specifically, the labor force flow and the reasons for unemployment to see if a downswing has turned into a recession.
Bunker expressed concern that more people were losing their jobs than leaving voluntarily.
In March, the labor force participation rate reached 62.6%. This is a record high for the pandemic era. This figure is still below the February 2020 rate (63.3%).
The number of layoffs continues to rise.
According to a report published Thursday by the outplacement firm Challenger, Gray & Christmas, US employers cut 66,995 jobs in April, bringing their total for January-April to 337,411. The report states that outside of 2020, this is the highest total year-to date since 2009.
Retailers were the biggest losers, with 14,689 fewer jobs.
In a recent statement, Andrew Challenger, senior Vice President of Challenger, Gray & Christmas, said that retailers and consumer goods producers are preparing themselves for a reduction in consumer spending, especially with the Fed raising interest rates to try to control inflation.
In recent weeks, weekly jobless claims are on the rise. Initial filings rose 13,000 to 242,000 in last week. They remain below average historical levels: in the decade prior to the pandemic weekly claims averaged 311,000.
13 min ago
What is the difference between a cooling down and a downward trend?
The latest report on labor turnover from the Bureau of Labor Statistics, Job Openings and Labor Turnover Survey for March, showed that the number of job openings decreased, hiring was flat and quits were trending down. Layoffs also increased.
"JOLTS now really points in the same direction as other labor-market data: that the labor market has cooled down," said Nick Bunker. He is the director of economic research at the Indeed Hiring Lab. This is the economic data insight, analysis and interpretation arm of the job website Indeed.
It is logical and desirable that the Federal Reserve, in its effort to combat inflation, has a flurry of interest rate increases. Bunker says it is unclear just how significant a slowdown may be.