Strong Non Farm Payroll provides Ammunition for Bulls and Bears alike

April saw a considerable rise in Non Farm Payrolls, with the private sector driving monthly gains of 244,000. Whilst recent jobless claims data showed an alarming rise of 474,000 for the week ending 30th April; a rise attributed to seasonal factors including Spring break layoffs and the introduction of an emergency benefits programme; concerns that the NFP could provide a similarly bleak outlook for the US Economy appear to have been averted. For now at least...

The Non Farm Payroll data recorded further growth from the March figure of 221,000 by posting further gains of 244,000 in April. Driven primarily by growth within the Private Sector; which recorded gains of 268,000 in April, up from 231,000 in March; State and Local Government recorded declines in payrolls of 24,000. Further gains in the most recent ISM Manufacturing report were also reflected in the NFP, with Manufacturing Payrolls rising from 22,000 in March to 29,000 in April.

Though inherently positive, the NFP data does provide a number of indications that a slowdown in the US labour market could soon follow. Whilst average weekly hours has remained constant for a third consecutive month at 34.3, a minor improvement in the Average Hourly Earning figure of only 0.1% failed to meet already conservative estimates of a 0.2% gain.

Though illustrating growth, the minor rise in the Unemployment Rate from 8.8% in March to 9% in April provides confirmation of the struggle facing the US labour market. With analysts warning that it will be a number of years before employment levels similar to those in 2007 are replicated, the slow gains in the unemployment rate would appear to confirm that any improvement in the labour market will occur gradually over time.

Whilst the report does deliver a number of positives, reports earlier in the week will invariably have led many to identify the negatives exclusively. The report undeniably highlights a degree of slugishness within the US labour market, but then this will invariably have been expected. Whether your own personal views are Bullish or Bearish, this most recent round of NFP data will almost certainly offer insights which confirm your points of view.