Strong Jobs Report Contradicts Shaky Economic Data
Equities were mixed after a shaky week of economic data, until Friday’s Labor Report. The economic data looked worse than it actually was, as multiple data points saw upward revisions of the previous month's data.
Manufacturing and Services PMIs were lower than expected, but were higher than the previous month. The Manufacturing PMI came in at 49.2, which is close to 50 (a number that generally means the economy is expanding).
The Services PMI came in at 52.6 which was a considerable improvement over the previous month. The JOLTs Job Openings number cam in lower than expected and was the lowest reading since July of 2021. The ADP Private Employment data also disappointed, along with Initial and Continuing Jobless Claims. The market held up well, all things considered as Good Friday shortened trading for the week. Money Market Flows have slowed each week since the Banking Crisis began, which means investor concerns have eased. We will see if Q1 bank earnings later this week reignites some fears.
Good news came on Friday as markets were closed when the March Jobs Report showed a still resilient labor market.
Nonfarm Payrolls were basically in-line with expectations, but February's already solid report was revised higher by 15,000 jobs. In addition, the Unemployment Rate dropped from 3.6% in February to 3.5% in March.
This week will provide further insight into how the economy is holding up following the Banking Crisis. Consumer Credit seemed to slow in February, so this week's release of Retail Sales will be important to watch as the consumer comprises two-thirds of GDP. Another drop in the year-over-year numbers in CPI and PPI this week could fuel speculation that the Fed may pause rate hikes in May. Then we have multiple Fed speakers, which given their pattern of dovish/hawkish double-speak lately, can always play with investors' emotions.
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