Executive summary
U.S. payrolls added 175,000 jobs in April, missing the consensus expectations of 240,000. That was coupled with downward revisions lowering the prior two months by 22,000, modestly reducing the six-month average to 242,300.
Yet, the gradual cooling trend remains intact as most labor metrics are cooler on a year-over-year basis as the unemployment rate rose, while average hourly earnings and hours worked slipped. That said, the economy isn’t weak as it continues to create roughly 65,000 more jobs per month compared to the pre-pandemic pace of 177,000.
Ultimately, the resilient labor market reflects a solid, albeit cooling, U.S. economy. That validates the Federal Reserve (Fed) remaining in a holding pattern. Alas, pushing rate cuts out further this year has frustrated markets. Still, given where key components such as housing are trending, we believe that progress on inflation should allow for at least one rate cut before the end of the year.
