US labour market shows solid growth

BY Janne Muta

|May 5, 2023

The April Non-Farm Payrolls (NFP) report was released today, revealing stronger-than-expected growth in the US labour market. US non-farm payrolls increased by 253K, surpassing the expected 180K. This signals continued recovery and expansion in the economy.

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The unemployment rate also improved, dropping to 3.4% compared to the expected 3.6% and the previous month's 3.5%. This decrease indicates a tighter labour market as economic conditions improve. The labour force participation rate remained unchanged at 62.6%, reflecting a stable workforce in the economy. The employment market has slowed down but remains solid.

Average hourly earnings increased by 0.5% month-over-month, outperforming the expected 0.3% increase. This demonstrates that employers are offering higher wages to attract and retain workers in a competitive labour market. Furthermore, average hourly earnings grew by 4.4% year-over-year, again beating expectations of a 4.2% increase. This growth showcases sustained wage gains for workers and indicates inflation could be stickier than earlier expected. Lastly, average weekly hours remained constant at 34.4, meeting expectations and indicating a stable workweek for employees.

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In conclusion, the April NFP report highlights a robust labour market with better-than-expected job growth, declining unemployment, and rising wages. These positive indicators should contribute to continued economic expansion in the coming months and alleviate the biggest recession worries. The report seems to be overall supportive of equities. The initial reaction in the USD was bullish, but the Federal Reserve is unlikely to make decisions based solely on one set of numbers. Instead, they are expected to monitor several NFP releases before making decisions on future monetary policy. Therefore, the markets are not likely to give this report overly strong weight when anticipating the future course of the dollar and dollar-priced assets.

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Janne Muta
Chief Market Analyst

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Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

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