Afternoon Note
The job market continues to expand as 204,000 private sector jobs were added from March to April. This is the 6th consecutive month that jobs have been above 200,000. However, it is the lowest addition since November. This number sets us for the highly watched and anticipated monthly nonfarm payrolls to reported by the BLS on Friday.
According to Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, “The labor market continues to maintain a steady pace of strong job growth with little sign of a slowdown.”
Medium size business led the way higher this month. Mark Zandi, chief economist of Moody’s Analytics, said, “Despite rising trade tensions, more volatile financial markets, and poor weather, businesses are adding a robust more than 200,000 jobs per month. At this pace, unemployment will soon be in the threes, which is rarified and risky territory, as the economy threatens to overheat.”
Business Size |
Change |
Small 1-49 Employees |
62,000 |
Midsize 50-499 Employees |
88,000 |
Large 500 or more Employees |
54,000 |
Goods producing jobs added 44,000 while service producing added 160,000 jobs. Significant increases where in Professional & Business, Education &Health, and Leisure and Hospitality. Yildirmaz added, “as the labor pool tightens it will become increasingly difficult for employers to find skilled talent. Job gains in the highskilled professional and business services industry accounted for more than half of all jobs added this month. The construction industry, which also relies on skilled labor, continued its six month trend of steady job gains as well.”
Good Producing |
Service Producing |
Mining +7,000 |
Trade, Tran & Utility +14,000 |
Construction +27,000 |
Information -2,000 |
Manufacturing +10,000 |
Financial Activities +7,000 |
Professional & Business +58,000 |
|
Education & Health +39,000 |
|
Leisure & Hospitality +36,000 |
|
Other +8,000 |
Oil is flat despite another strong increase of 6.2 million barrels in U.S. crude stockpiles for the week ending April 27 as reported by the Energy Information Administration. This is almost twice what the American Petroleum Institute reported yesterday, at 3.4 million barrels. Potential sanctions on Iran has kept the commodity elevated.
Gasoline stockpiles also increased, but it was offset by a decline in distillates. As U.S. production continues to increase, stockpiles are rising as well. Last week, 5 U.S. oil rigs were added, and year over year 125 rigs have gone into production.
EIA Petroleum Inventories |
Actual |
Expected |
Crude Oil |
6.2 million |
0.7 million |
Gasoline |
1.2 million |
0.8 million |
Distillates |
-3.9 million |
-1.4 million |
Markets are buying time as they await the FOMC rate decision due out at 2pm. Investors are expecting the Fed to leave interest rates unchanged after its two-day policy meeting. How the Fed opts to word its policy statement with regards to inflation will be the focus of investors’ attention. A key inflation indicator that the fed watches closely, the personal consumption expenditures price index (PCE index), hit the Feds inflation target of 2% year over year in the March release. How the Fed handles rising inflation will also be tricky. On the one hand, they want to nip inflation before it can accelerate. On the other hand, they don’t want to be too quick in raising interest rates as to stifle economic growth. It is a balancing act that will be closely followed.
Equity markets are trading close to unchanged in advance of the release.
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