The next US official employment report is due on May 5. Analysts at TD Securities point out that data suggest a slowdown in payrolls to sub-200,000 levels for the first time since 2020.
Key quotes:
“High-frequency data suggest the pace of job creation is likely to take a step down in April, with payrolls set to advance at a sub-200k pace for the first time since 2020. Our interpretation of the daily Homebase series, which tracks small-business payrolls, suggests employment rose 150k.”
“This would be in sync with this week’s Beige Book report which noted that employment growth moderated somewhat this period as several Districts reported a slower pace of growth than in recent Beige Book reports.”
“Jobless claims were little changed vs mid-March, but continuing claims have been rising. This story might change in coming months, though layoffs have concentrated on the information sector (tech), with no evidence of large spillovers into other sectors just yet.”
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The latest US jobs report has led to speculation that the April payrolls number may not rise as much as initially forecasted. According to Toronto-Dominion Bank (TDS) senior economists, April payrolls are expected to show a slower pace of growth and total non-farm payrolls (NFP) should increase by about 150,000 positions.
This is a significant decline from the previous month, where NFP increased by 196,000 positions. This is to be expected, as the labour market had seen a steady decline in the overall job market for the past several months.
Although the more pessimistic outlook for April payrolls does contradict some of the more positive economic indicators from earlier this month that led to strong stock market gains, rising wages, and improved consumer spending.
However, there remain some positives, such as a continued decline in the unemployment rate, low inflation and the introduction of tax cuts that are expected to offer some support to the economy in coming months.
In addition, TDS noted that the new job market might bring opportunities for higher quality jobs that support stronger wages and better job security, as the number of part-time and temporary workers might begin to decline.
Overall, the slower April payrolls number may be a sign of a more modest economic recovery. But if the current trend continues, it could indicate that the US economic growth is holding steady, and that higher quality jobs may become available soon.
