Latest / Markets with Megan: A Quick Financial Markets Update / Understanding the Employment Surge in the March Jobs Report | Episode 118 | 04-05-2024

Transcript

Understanding the Employment Surge in the March Jobs Report | Episode 118 | 04-05-2024 · Markets with Megan: A Quick Financial Markets Update

• 0:03
  Megan Horneman: Well, we've rounded out a week of surprising economic data.
• 0:06
  Megan Horneman: It's Friday, april 5th, and this is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors.
• 0:12
  Megan Horneman: We're coming to you today with our regular segment of Markets with Megan and we're going to discuss the March jobs report.
• 0:18
  Megan Horneman: This is a once-a- month report that we get.
• 0:20
  Megan Horneman: That gives us the health of the labor market and it's usually very widely monitored as well as can be a market mover, and we're seeing that today.
• 0:29
  Megan Horneman: Let's dig right into it.
• 0:31
  Megan Horneman: This was a pretty surprising report.
• 0:34
  Megan Horneman: Jobs came in.
• 0:35
  Megan Horneman: The US economy created 303,000 jobs.
• 0:38
  Megan Horneman: It was the most since May of last year and it was a big upward surprise.
• 0:43
  Megan Horneman: The expectations were not for jobs over 300,000.
• 0:47
  Megan Horneman: The unemployment rate also did dip a tiny bit lower to 3.8%, but that was the first drop we've seen in the unemployment rate in four months.
• 0:56
  Megan Horneman: We also saw a big increase in the labor force.
• 1:00
  Megan Horneman: That was up by the most in four months as well.
• 1:03
  Megan Horneman: So let's dig into where these jobs are being created.
• 1:06
  Megan Horneman: Where it was driven was government jobs, private education and healthcare, as well as leisure and hospitality, which is back to pandemic levels, the goods producing side, as well as construction, and then trade and transportation jobs.
• 1:22
  Megan Horneman: This is where the strength was led.
• 1:24
  Megan Horneman: We did see a drop again in temporary help.
• 1:29
  Megan Horneman: From an earnings perspective, the earnings average hourly earnings are growing 4.1% on a year-over-year basis.
• 1:35
  Megan Horneman: That's a much better than historical average number.
• 1:40
  Megan Horneman: But the Fed and investors are liking this because it's a bit slower than it was last month, when we were at 4.3 and the prior month at 4.4.
• 1:49
  Megan Horneman: And the Fed has talked about wage inflation being a sticky issue.
• 1:53
  Megan Horneman: So the fact that this came in at 4.1 percent and there was no big surprises there investors like this and we're seeing the equity market up today.
• 2:01
  Megan Horneman: This is after a lot of weakness we've seen this week.
• 2:05
  Megan Horneman: The other things that we're going to just pull apart is it was interesting to see that part-time workers they surged, while we actually, if you look at full-time workers, that actually declined and then those that are holding multiple jobs, that increased as well.
• 2:21
  Megan Horneman: So what do we make of this?
• 2:23
  Megan Horneman: What does this mean?
• 2:24
  Megan Horneman: First of all, it's a strong labor market.
• 2:27
  Megan Horneman: The Fed doesn't need to do anything right now.
• 2:29
  Megan Horneman: So you're seeing rate cut expectations now being pushed.
• 2:33
  Megan Horneman: It was March, then it was June, it was July as of yesterday, and now you're seeing the odds being pushed out to December, more in line with our view that this is going to be a second half of the year story.
• 2:44
  Megan Horneman: The inflation side of this is good, but it's not great and it still is well above what the Fed wants.
• 2:52
  Megan Horneman: It's going in the right trajectory, so we'll continue to monitor that.
• 2:54
  Megan Horneman: There's going to be a lot of questions about immigration and what part that played in these jobs reports and what part that's going to play going forward.
• 3:01
  Megan Horneman: Unfortunately, we can't get solid numbers on whether it's worker permits or the amount of illegal immigrants that are getting work.
• 3:11
  Megan Horneman: That's something that we can't hone in on, but by looking at some of these numbers and the comments that we got from Federal Reserve Chairman Jerome Powell yesterday, that immigration is playing a part in the labor market.
• 3:22
  Megan Horneman: It is helping to bring the labor market a bit more in balance.
• 3:25
  Megan Horneman: Remember, we have the amount of job postings exceeding those that are unemployed.
• 3:30
  Megan Horneman: So the immigration is playing a part.
• 3:33
  Megan Horneman: We just can't quantify it at this time.
• 3:35
  Megan Horneman: We'll continue to monitor, though, and see if we can wrap some numbers around it.
• 3:39
  Megan Horneman: That's all we have today.
• 3:41
  Megan Horneman: Labor market still keeps chugging along.
• 3:43
  Megan Horneman: Hourly earnings are doing well.
• 3:45
  Megan Horneman: This is keeping consumer spending supported.
• 3:48
  Megan Horneman: We'll come back with additional information next week.
• 3:50
  Megan Horneman: It's a big week with inflation.
• 3:52
  Megan Horneman: The CPI report will be out next week, so if you have any questions or comments, please feel free to reach out to podcasts at verdence dot com.
• 3:59
  Megan Horneman: Thank you so much, you.