Employers added relatively fewer workers in April and the Fed eased its tightening. Here are the five things we learned from U.S. economic data released during the week ending May 3.
Payrolls grew at a slower pace in April. Nonfarm employers added a seasonally adjusted 175,000 workers to their payrolls, sharply down from the 236,000 and 315,000 gains in February and March, respectively (but still a solid pace in most respects). Private sector payrolls grew by 167,000, including 153,000 in the service sector. Industries adding the most workers were health care/social assistance (+87,000), transportation/warehousing (+21,800), retail (+20,100), and wholesale trade (+10,100). Average weekly earnings of $1,191.93 was up 3.9 percent from a year earlier.
The same Bureau of Labor Statistics report shows that the unemployment rate is inching up 1/10th of a percentage point to 3.9 percent (April 2023: 3.4 percent). 87,000 people entered the labor force in April, while the labor force participation rate held steady at 62.7 percent. The 25 to 54 labor force participation rate added 1/10th of a percentage point to 83.5 percent, matching its 20+ year high that it has hit several times in recent months. The median length of unemployment was 8.7 weeks, matching that of a year earlier and down 8/10ths of a week from March. There were 4.469 million workers with a part-time job that sought full-time hours (April 2023: 3.896 million).
The Fed kept rates the same but slowed its quantitative tightening. The policy statement released following the past week’s Federal Open Market Committee (FOMC) meeting largely maintained its language about the state of the economy. However, it commented that “there has been a lack of further progress” in its goal to lower inflation. It does note that the FOMC “judges the risk to achieving its employment and inflation goals have moved toward better balance.” As a result, the committee voted unanimously to keep the fed funds rate at 5.25-5.50 percent. A significant shift was the announcement that the Fed would slow its monthly reduction in Treasury securities from $60 billion to $25 billion.
Manufacturing activity contracted in April. The Manufacturing PMI lost 1.1 points to fall to 49.2. The Institute for Supply Management measure has been below 50.0—the threshold between an expanding and contracting manufacturing sector—for 17 of the past 18 months. Declining were indices for new orders and production, while inventories held steady and employment improved. Nine of 18 tracked manufacturing industries reported growth, led by nonmetallic mineral products, printing, and primary metals. The press release characterized demand as being in “the early stages of recovery, with continuing signs of improving conditions.”
The service sector’s winning streak ended in April. The ISM’s Services PMI shed 2.0 points to 49.4. The Services PMI had not been below 50.0 for 16 consecutive months. Falling were measures for business activity, new orders, and employment. The inventories index rose. Twelve of 18 tracked service sector industries expanded in April, led by accommodation/food services, construction, and agriculture. Survey respondents noted slowing business activity, with “inflation and geopolitical issues” being “concerns.”
Export and import activity slowed in March. The Census Bureau and the Bureau of Economic Analysis report that exports dropped 2.0 percent to a seasonally adjusted $257.6 billion and imports fell 1.6 percent to $327.0 billion. The resulting trade deficit of -$69.4 billion was off 0.1 percent from February. The goods deficit grew $0.8 billion to -$92.5 billion, slightly outpacing the $0.9 billion expansion of the services surplus. The former reflected declining exports of civilian aircraft, nonmonetary gold, and soybeans, as well as increased crude oil exports. Imports of pharmaceuticals rose, but those of passenger cars and cell phones declined. The U.S. had its largest goods deficits with China, the European Union, Mexico, and Vietnam.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending April 27, 2024, First-Time Claims, seasonally adjusted): 208,000, Unchanged vs. the previous week, -6,000 vs. the same week a year earlier). 4-week moving average: 210,000 (-3.1% vs. the same week a year earlier).
- Job Openings and Labor Turnover (March 2024, Job Openings, seasonally adjusted): 8.488 million (-3.7% vs. February 2024, -11.8% vs. March 2023).
- Conference Board Consumer Confidence (April 2024, Index (1985=100), seasonally adjusted): 97.0 (March 2024; 103.1; April 2023: 102.5.
- Factory Orders (March 2024, New Orders for Manufactured Goods, seasonally adjusted): $584.5 billion (+1.6% vs. February 2024; -0.1% vs. March 2023).
- Vehicle Sales (April 2024, Automobiles and Light Trucks, seasonally adjusted annualized rate): 15.736 million (+1.1% vs. March 2024; +0.4% vs. April 2023).
- Construction Spending (March 2024, Value of Construction Put in Place, seasonally adjusted annualized rate): $2.084 trillion (-0.2% vs. February 2024; +9.6% vs. March 2023).
- S&P Case-Shiller Home Price Index (February 2024, National Index, seasonally adjusted): +0.4% vs. January 2024; +6.4% vs. February 2023.
- FHFA House Price Index (February 2024, Purchase-Only Index, seasonally adjusted): +1.2% vs. January 2024; +7.0% vs. February 2023.
- Agricultural Prices (March 2024, Prices Received by Farmers, not seasonally adjusted): +1.5% vs. February 2024; -4.8% vs. March 2023.
The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.
What We Learned About the U.S. Economy Last Week 