Latest / Markets with Megan: A Quick Financial Markets Update / Jobs Report Surprises Wall Street | S2 E038 | 05-02-25

Transcript

Jobs Report Surprises Wall Street | S2 E038 | 05-02-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: We finally got some good news on the economic front.
• 0:03
  Megan Horneman: It's Friday, May the 2nd, and this is Markets with Megan.
• 0:05
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• 0:07
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• 0:08
  Megan Horneman: You can also share it with friends, family and colleagues.
• 0:11
  Megan Horneman: But we're here today to talk about the April jobs report and this is tends to be it's the first Friday of every month and it's the employment report can be a big market mover and we're seeing that today.
• 0:21
  Megan Horneman: We got some good news on the labor front.
• 0:23
  Megan Horneman: So let's dig into this report.
• 0:25
  Megan Horneman: Jobs came out.
• 0:26
  Megan Horneman: That US economy added 177,000 jobs.
• 0:29
  Megan Horneman: It was better than expected.
• 0:31
  Megan Horneman: The expectation was for 138,000.
• 0:34
  Megan Horneman: There were some net downward revisions to the prior months, but still at 177,000, it's a pretty solid report given that there were even some notions there might be close to zero or if not negative job print today.
• 0:48
  Megan Horneman: The unemployment rate stayed unchanged at 4.2 percent, so still very low from a historical standard.
• 0:54
  Megan Horneman: The labor force participation rate that did tick a little bit higher.
• 0:58
  Megan Horneman: That's good news for the economy, the underemployment rate as well.
• 1:03
  Megan Horneman: So this tends to be a good gauge of what's going on in the economy.
• 1:05
  Megan Horneman: It's those people that are working part-time for economic reasons where they would rather be working full-time and you're seeing that tick a little bit lower as well.
• 1:14
  Megan Horneman: When you look at things like hours worked, this is good news as well, because that moved slightly higher than the first reading we got from last month.
• 1:23
  Megan Horneman: And then when you look at average hourly earnings, this is what the Fed's looking at, because this is what we talk about wage pressures how much are wages rising?
• 1:32
  Megan Horneman: Are they rising where it's becoming an inflation issue?
• 1:35
  Megan Horneman: And right now wages are up 3.8% on a year-over-year basis.
• 1:40
  Megan Horneman: That's matching last month's number, but on the month-over-month it was a little bit lighter than we saw the prior month.
• 1:46
  Megan Horneman: So that means that we're not really worried too too much about runaway wage pressure inflation here.
• 1:53
  Megan Horneman: When you look at what the job where they were concentrated you saw healthcare jobs.
• 1:56
  Megan Horneman: They did lead the gains.
• 1:58
  Megan Horneman: We saw the federal government reduce jobs as well.
• 2:01
  Megan Horneman: Now this is the third consecutive month we've seen negative job creation for the federal government.
• 2:06
  Megan Horneman: Still not a lot, but again we're starting to see some of this doge effect in some of these numbers.
• 2:12
  Megan Horneman: Now what does this mean for the market?
• 2:14
  Megan Horneman: We saw bond yields rise on this because we're basically taking out rate cuts now, because this is a not too hot, not too cold type of report where we're still adding jobs, the unemployment rate isn't skyrocketing and yet those wages are staying solid but not rising at a rapid pace.
• 2:31
  Megan Horneman: So this is good news for the Fed.
• 2:33
  Megan Horneman: It basically takes off any chance that they'll cut rates next week.
• 2:37
  Megan Horneman: There's a 3% chance, if you look at the futures market, that they will cut rates next week at their meeting.
• 2:44
  Megan Horneman: There's about a 30% chance they'll cut at the June meeting.
• 2:48
  Megan Horneman: We obviously we don't think May's on the table June or July are still there on the table, but we've got a lot of more economic data before we get those numbers.
• 2:57
  Megan Horneman: So the equity markets have rallied on this as well.
• 3:00
  Megan Horneman: We've now erased those losses that we saw during the April route, that we saw on the market from the tariff announcement on April 2nd.
• 3:08
  Megan Horneman: So again, this is good news for the market.
• 3:10
  Megan Horneman: We'll take it, we'll take the win and we'll be back next week with the Fed meeting.
• 3:14
  Megan Horneman: But don't forget we're still in the midst of earnings season as well, so we'll be back with any big earnings reports that we need to discuss.
• 3:21
  Megan Horneman: That's all we have.
• 3:22
  Megan Horneman: If you'd like a further history of this podcast, you can go to marketswithmeganfm.
• 3:27
  Megan Horneman: Thank you.