- U.S Adds 211,000 Jobs to Payroll in April
The U.S. labour market rebounded in April, after rising lower than previously projected in March.
The economy added 211,000 jobs to beat economists projection of 190,000 jobs, a Labour Department report showed on Friday.
While the unemployment rate is now the lowest since May 2007, wages were a soft spot in the report, climbing 2.5 percent from a year earlier.
The brighter figures follow a weaker-than-expected reading in March, when payrolls were partly depressed by a snowstorm that slammed the Northeast during the survey week. Strengthening business sentiment might be translating into hiring, and the data should keep Federal Reserve policy makers on track to raise interest rates in the coming months after officials declared the first-quarter slowdown to be temporary.
“Labor market conditions remain robust and continue to tighten,” said Ward McCarthy, chief financial economist at Jefferies LLC in New York, who had forecast a payrolls gain of 220,000. “This data will keep the Fed on track for a preferred 2017 normalization timeline of rate hikes in June and September and the first step toward balance-sheet normalization in December.”
The report showed revisions to the previous two months subtracted 6,000 jobs from payrolls. The first quarter saw a 176,000 average monthly increase after a 187,000 average pace in 2016.
The unemployment rate compares with economists’ projection for 4.6 percent. It’s now below the 4.5 percent level where Fed policy makers in March had forecast it would reach in the fourth quarter, based on their median estimate.
Employment gains were broad-based though concentrated in services in April. Leisure and hospitality registered a 55,000 increase, education and health services was up 41,000 and financial activities rose by 19,000. Retail rebounded with a 6,300 increase following a revised loss of 27,400.
Manufacturing and construction jobs rose but at a weaker pace than at the start of 2017. Factories added 6,000 jobs after a 13,000 gain, while construction workers rose by 5,000 following 1,000 in March.
Total private employment, which excludes government agencies, climbed by 194,000 in April, following a 77,000 advance the prior month. Government payrolls rose by 17,000 in April, including a 6,000 decline at federal agencies and 23,000 increase at state and local governments.
Wage growth accelerated on a monthly basis to 0.3 percent from a revised 0.1 percent gain in March. At the same time, the 2.5 percent year-over-year gain in average hourly earnings was the weakest since August, following a 2.6 percent rise in March.
The employment cost index increased 0.8 percent in the first quarter for the best performance since the end of 2007, a separate Labor Department report showed last week.
Absent faster wage growth, consumers have retained a healthy outlook as they’ve largely socked away savings from income gains including stronger stock and housing prices. Weaker household purchases in the first quarter reflected a slowdown in automobile sales, which are easing to a more sustainable rate, and smaller home-heating bills owing to unusually warm weather.
“The underlying consumer fundamentals remain positive because the labor market remains positive,” said McCarthy of Jefferies.
Dwindling labor-market slack also is helping workers gain bargaining power. Beyond the broad unemployment rate, measures of spare workforce capacity that are favored by Trump administration officials showed further progress toward pre-recession levels in April.
The underemployment rate, a measure that includes those working part-time who would take a full-time job if it were available, dropped to 8.6 percent, the lowest since November 2007, just before the last recession began. It was from 8.9 percent in March.
The number of discouraged workers fell by 5,000 in April to 460,000, and was 363,000 the month the last recession started. The participation rate, which indicates the share of working-age people who are employed or looking for work, decreased to 62.9 percent from 63 percent the prior month.
The seasonally adjusted number of people working part-time who would prefer a full-time job fell to 5.27 million, the lowest since April 2008, moving closer to the 4.62 million reading from December 2007.
Barclays Tell High Net Worth Investors to Shun Africa and Other Emerging Economies
Barclays to High Net Worth Clients, Stay Off Africa and Other Emerging Economies
Barclays, one of the world’s largest investment banks, has started advising high net worth clients to stay off Africa and other emerging economies.
According to Barclays, despite the recent recovery noticed in emerging-market stocks, investors are better off avoiding the risks that still abound in emerging nations. Barclays Plc, however, advised high net worth clients to focus on U.S equities despite the S&P’s breakneck rally.
The investment bank said emerging economies do not have enough fiscal buffers to spend their way out of the COVID-19 pandemic and will likely continue to struggle in the near-time compared to the US with 12 percent of gross domestic product fiscal-support.
It said the huge US stimulus may halt rebound in emerging-markets stocks as more money is expected to flow into the world’s largest economy and its European counterparts.
“Compared to the U.S., emerging-market economies appear more vulnerable,” said Haider, the London-based managing director and head of global growth markets. “Their central banks have less room to maneuver, their governments may not be able to provide unlimited support and equity markets, given their sector mix, can be more challenged by an economic slowdown.”
Barclays added that even after 33 percent rebound in stocks of emerging markets since the panic selloff subsided in March, stocks are still down by 9 percent from year-to-date while the US S&P 500 stocks are up by 45 percent. Presently, their stocks trading at a 36 percent discount to US stocks, up from 25 percent three months ago.
Crude Oil Rises to $43.1 Per Barrel on Production Cuts Extension
Crude Oil Hits $43.1 Per Barrel Following OPEC’s Production Cuts Extension
Brent crude oil, against which Nigerian oil price is measured, rose by 1.25 percent on Monday during the Asian trading session following OPEC and allies’ agreement to extend crude oil cuts to the end of July.
OPEC and allies, known as OPEC plus, agreed to extend production cuts of 9.7 million barrels per day reached in April to July on Saturday.
In the virtual conference, delegates agreed that members, including Nigeria and Iraq presently struggling to attain a 100 percent compliance level must keep to the agreement or be forced to do so in subsequent months.
Nigeria, Iraq and others failed to keep to the cartel’s agreement in May after reports show that Nigeria only managed to attain a 19 percent compliance level during the month while Iraq struggled to attain just 38 percent in the same month.
Russia and Saudi Arabia, the two largest producers of the group, warned members to stick to the agreed quota if they want to rebalance the global oil market.
“While the errant producers such as Iraq and Nigeria have vowed to reach 100% conformity and compensate for prior underperformance, we still think they will likely continue to have some commitment issues over the course of the summer,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.
“The potential return of Libyan output could also cause considerable challenges for the OPEC leadership.”
Earlier on Monday, Brent crude oil hits $43.1 per barrel, more than a month record-high, before pulling back slightly to $42.83 per barrel.
Gold Dips by 2 Percent on Better Than Expected Job Report
- Gold Dips by 2 Percent on Better Than Expected Job Report
Gold prices declined by 2 percent on Friday following a better than expected US non-farm payroll report.
The report showed an increase of 2.5 million payroll numbers against a decline of 7.5 million predicted by many experts.
The surprise number boosted investors’ confidence in US recovery as many dumped their haven investment (gold) for the stock market.
“We had significantly stronger-than-expected U.S. payroll numbers – an increase of 2.5 million versus an expectation of a decline of 7.5 million – that 10-million swing has brought forward expectations of the economic recovery in the United States,” said Bart Melek, head of commodity strategies at TD Securities.
Spot gold immediately declined by 1.9 percent per ounce to $1,678.81 while the U.S. gold futures slid 2.6 percent to settle at $1,683.
Gold was also being pressured by stronger yields and a slightly firmer dollar, “meaning the opportunity cost to hold gold in the portfolio has gone up,” Melek added.
The surprise didn’t stop there, US Dow Jones was up 614 points despite the protest going on the US and US-China tension.
Also, NASDAQ rose by 29 points while the S&P index added 50 points increase.
Note: Investors generally increase their investments in gold and other haven assets during a crisis to avert risk exposure and do the opposite once they sense a better economy.
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