US jobs power on...and on
Say what you like about President Trump - and let's face it, most of us have by now - but the jobs are being delivered.
US payrolls increased by a thumping +263,000 in April 2019, while revisions to previous months added a further +16,000 jobs.
Over the past year the US economy has added just shy of 2.6 million to payrolls, or just under +1.8 per cent.
An unseasonably warm April may have goosed the numbers this month, however, and the 3-month average gain also pared back to a less dramatic +166,000.
This puts the result in the 'Goldilocks' category, rather than 'shooting the lights out'.
This puts the result in the 'Goldilocks' category, rather than 'shooting the lights out'.
The US economy has now added positive payrolls results for an unprecedented 103 consecutive months.
The unemployment rate fell by 0.2 per cent percentage points to 3.6 per cent, which is the lowest since December 1969.
But participation was lower.
Female unemployment is at the lowest level since 1953.
But participation was lower.
Female unemployment is at the lowest level since 1953.
There's still no evidence of wages accelerating too dramatically, with average hourly earnings up by +3.2 per cent over the year, which missed market expectations slightly.
Wages have outpaced inflation now for 6½ years, and with inflation easing to 2 per cent real earnings are growing at the fastest pace of the expansion.
Dovish Fed
Some fascinating dynamics playing out here.
A range of indicators have suggested that the US economy was increasingly looking set for duress with further rate hikes, and indeed markets have been pricing cuts by next year.
But jobs growth keeps pushing on for now, and there are more job openings than there are unemployed persons.
So there is still hope that wages will eventually start to lift further with the unemployment rate at 49-year lows.
So there is still hope that wages will eventually start to lift further with the unemployment rate at 49-year lows.
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The Amazon (NASDAW: AMZN) share price is now up 50 per cent since Xmas Eve.
A totally normal market, or something like that.
Stock valuations are back at very stretched levels in the US.
Stock valuations are back at very stretched levels in the US.
As discussed last week, Tesla (NASDAQ: TSLA) is seeking to raise a couple of billion dollars in capital.
Stock prices typically fall on dilution, but in this case the share price bounced to $255, with sceptical analysts implying that the raising is required to meet working capital requirements.
No doubt Tesla has brand power, but its major problems are that it isn't making any profit, and that Volkswagen will follow in its footsteps to build electric vehicles more efficiently and profitably.
Discl: No position; merely an interested observer.
