Job Market Cools In April: Payrolls Miss Forecasts, Wages Rise Less Than Expected (UPDATED)

Editor’s note: This story has been updated with additional details.

The April performance of the U.S. labor market missed expectations, providing some evidence of cooling economic momentum and potentially leaving the door open for interest rate reductions later this year.

U.S. employers added 175,000 nonfarm payrolls in April, marking a reduction from the upwardly revised 315,000 reading in March and missing the expected 238,000, the Bureau of Labor Statistics said Friday.

April Jobs Report: Key Highlights

• Nonfarm payrolls increased by 175,000 on the month, marking a slowdown from March’s 315,000 and falling short of economists’ expectations for a 238,000 increase.
• The unemployment rate went from 3.8% to 3.9%, more than the expected 3.8%.
• Average hourly earnings edged down from 4.1% to 3.9% compared to April 2023, falling more than the expected dip to 4%.
• On a monthly basis, hourly earnings advanced at a 0.2% pace, decelerating from the both the previous and expected 0.3%.

Measure	April 2024	Estimate	March 2024
Nonfarm payrolls	175,000	238,000	315,000 (revised up from 303,000)
Unemployment rate	3.9%	3.8%	3.8%
Wage growth (YoY)	3.9%	4.0%	4.1%

Market Reactions

The surprisingly cooler jobs report suggests looser labor market conditions in the U.S. economy, renewing investor optimism for potential interest rate cuts later this year.

Consequently, Treasury yields dropped across the board immediately after the report, reflecting investor expectations of forthcoming rate reductions. The two-year yield, which is sensitive to policy changes, slipped from 4.86% to 4.72%.

The U.S. dollar index (DXY), tracked by the Invesco DB USD Index Bullish Fund ETF UUP, declined by 0.7%.

Futures on U.S. major averages trended higher during premarket trading on Friday. Contracts on the S&P 500 were 1.1% higher at 8:46 a.m., while Nasdaq 100 futures rose 1.8%.

On Thursday, the SPDR S&P 500 ETF Trust SPY closed 0.9% higher.

During premarket trading, the Technology Select Sector SPDR Fund XLK surged the most, climbing by 2.3%, followed by the Real Estate Select Sector SPDR Fund XLRE, up 1.6%.

Following the jobs report, among mega-cap stocks, Booking Holdings Inc. BKNG saw the largest rally at 0.94%, followed by PDD Holdings Inc. PDD at 0.52%, Airbnb Inc. ABNB and Lockheed Martin Corp. LMT at 0.4%, and Uber Technologies Inc. UBER at 0.39%, according to data from Benzinga Pro platform.

Mega-cap stocks declining the most after the jobs report were Novo Nordisk A/S NVO, with a decrease of 0.57%, followed by Toronto-Dominion Bank TD and Merck & Co MRK, both down 0.34%, NVIDIA Corp. NVDA down 0.3%, and PepsiCo Inc. PEP losing 0.28%.

Read now: Federal Reserve Takes Cautious Stand On Inflation, Powell Signals Preference For Rate Cuts Over Hikes

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