| The US economy added 175,000 jobs in April, falling short of expectations for the first time in six months and showing a steep drop from the revised 315,000 figure for March.
That sent stocks soaring and bond yields plunging. Why? A higher number had the potential to push any rate cuts from the Federal Reserve further into the future. A lower number would signal cracks in economic growth and hint at stagflation.
Instead, investors took the not-too-high, not-too-low hiring numbers as a sign that the hoped-for soft landing for the economy is still on the cards, despite sticky inflation.
“In our view, the softening trend in labor markets will make it easier for the Fed to cut rates,” Brian Rose, a senior US economist at UBS Global Wealth Management, wrote.
While investors might be happy with the jobs numbers, they’re likely to do little for the economic mood. Wage growth slowed while unemployment picked up. White-collar workers are finding it harder to get hired.
It’s a reminder that good news for the stock market isn’t always good news for workers. |
