The April NFP, which has increased only 266K with data that diverges so sharply from the expectation for the first time in a long time, will also question the path to the “tapering” process of the Fed. Powell insisted that there is more for job market to recover, and for the time being justified against the interest rate argument put forward “inadvertently”. While the unemployment rate rose to 6.1% again; The increase in the participation rate to 61.7% explains the increase. While the private sector adds 218K jobs, manufacturing employment declined by 18K, with employment mainly carried by the service sector.
If we look at the sub items; employment gains in entertainment and accommodation, other services, and education, offset by a decline in relief services and courier and cargo services. Employment in the leisure and hospitality sectors increased by 331,000 as pandemic restrictions continued to decline in many parts of the country. More than half of the increase is in the food and beverage sector (187K). Despite a 77K decrease in shipping and storage, cargo services, employment is 126K above February 2020. There is a limited increase of 7K in air transportation. Manufacturing industry employment fell in April (-18,000) after increases in the previous 2 months (+54,000 in March and +35,000 in February).
The details that can be attributed positively are; long-term unemployment fell to 10.4% (returns to work continued), average hourly earnings increased by 0.3% (0.4% reduction was expected, we will refer to this below), and weekly working hours increased to 35 (full timed employment is increasing and working hours are extended with the effect of opening). Those who lost their jobs at the beginning and during the pandemic, especially in medium-sized, small and local businesses, generally low and medium wage segments. Since the outsiders were low-wage workers and the rest were managers, an artificial increase in hourly earnings was observed. This is why it is important to increase wages as employment increases. Wages should be more attractive than state benefits, making it faster to return to work.
It has the potential to postpone expectations for the Fed’s possible tapering speech at the June meeting, as data are available, which Powell interprets as “non-equal improvement”. The market is pricing a reflection of this. The argument for continuing monetary and fiscal incentives will gain strength. The dollar is negative, the 10-year returns are negative, the non-dollar major currencies are positive, and the EMs are positive.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı
