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April Jobs Report

05/05/2011
This morning's release of the April jobs report is SURPRISING, given the numbers are not as bad as consensus estimates feared.  Recent economic data suggests that the acceleration in global growth is moderating. This morning's report is inconsistent with the recent data.
 
Over the past eight months, the FOMC has properly focused on improving labor conditions rather than inflationary pressures. With the softening in recent global economic data, some have suggested QE3 or QE2 ½ will be needed. I continue to disagree with those assertions. I expect that given this morning's surprise report, the FOMC ends the $600 billion asset purchase plan at the end of June as planned. I also expect that the size of the FOMC's balance sheet will be gingerly reduced over the next 12 months.
 
April Jobs Report 
  • Headline +244,000 well above consensus
  • Private +268,000 well above consensus
  • Rate increased to 9.0% from 8.8%
  • Underemployment Rate increased to 15.9% from 15.7%
  • Factory payrolls +29,000 above consensus
  • Government payrolls fell by 24,000 - a positive sign
  • March headline revised higher from +216,000 to +221,000
  • February headline revised higher from +194,000 to +235,000
IN APRIL 2010, PRIVATE SECTOR JOBS REPORTED A MONTHLY INCREASE FOR THE FIRST TIME SINCE FEBRUARY 2008. THE CHART BELOW PORTARYS THE GROWTH SINCE:

Source: Bloomberg

SINCE QE2 WAS SUGGESTED, PRIVATE SECTOR JOB GROWTH HAS AVERAGED +167,890 JOBS. MORE IMPORTANTLY, OVER THE PAST THREE MONTHS, PRIVATE SECTOR JOB GROWTH HAS INCREASED SIGNIFICANTLY, AVERAGING 253,330 JOBS.:

Source: Bloomberg

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