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April Employment review, CPI preview ?3

09:04 11-May-26


The April BLS employment report headlined at +115K, approximately doubling estimates, and affirming the strength seen in the ADP report:

On 5/6/26 5:05 PM, Esekla wrote:
The April ADP headline came in +109K which handily beat projections closer to +80K, but YoY pay gains dropped by a tenth sequentially to +4.4%.  What the BLS has to say on Friday morning will matter more to market indexes, especially ahead of Warsh's confirmation, probably near the end of next week.  However, this more reliable data signals a resilient job market, but continued affordability concerns.

The macro war news seems more important to indexes at the moment, and Trump's reversal on Hormuz lends credibility to reports that both sides are drawing closer to an agreement.  Anthropic's $200b 5-year commitment to Google Cloud isn't hurting either.  This underscores the AI spending race that I highlighted last night.
The BLS unemployment rate was unchanged at 4.3%, but in actuality, it rose over 0.8% due to rounding up for March and down for April.  Accordingly, both the Participation Rate and Employment-population ratio both dropped by another tenth to 61.8% and 59.1%, respectively.  Furthermore, wage gains stayed a tenth below projections at +0.2%. 

So, this report wasn't as strong as the headlines might seem to indicate, and it needs tomorrow's Core CPI for context.  The YoY figures there are expected to rise to 3.8% for the headline and 2.7% for Core.  Some see the headline rising toward 5% in the near-term if some resolution with Iran can not be reached.  Though futures are mildly negative this morning, this service continues to expect that market indexes can continue to shrug off the pressure until we see whether or not gerrymandering can carry the midterms for Republicans.  However, even the Fed is paying attention to data on the K-shaped economy now, and small and medium businesses will continue to be pressured by tariff chaos.  In the meantime, the FedWatch chances of a cut actually increased a few percent to over 6% in Friday's trading, but is back down to 4% this morning.  Inflation typically flows into the stock market first, but that won't continue indefinitely.