US payrolls are slowing
The US unemployment rate has remained steadfastly low, over the past couple of years, but increased more than expected to 3.9 per cent in April, having gradually moved higher from the cycle low of 3.4 per cent.
It was also the weakest gain for payrolls in six 6 months, even as the economy notched a 40th consecutive monthly gain.
Despite high population growth, payrolls increased by far less than expected at +175,000, with revisions stripping another -22,000 from the preceding two months.
Job openings also declined in March, it was reported this week.
Importantly, the growth in average hourly earnings slowed to just +0.2 per cent overt the month, and at +3.9 per cent over the year fell below +4 per cent for the first time in nearly 3 years.
With an election coming up in the US the commentary from economists is becoming increasingly and sometimes absurdly partisan, which journalists torn between the desire to talk up a strong economy and breathe a sigh of relief that high interest rates are finally doing their job.
With most borrowers in the US using long-term fixed rate mortgages, tighter policy has taken a long time to show any meaningful effect on spending and hiring, but it does look as though things might finally be cracking a little.
Not a disaster, of course, with the headline unemployment rate still very low, but markets will love to see the prospect of lower interest rates by the final quarter of 2024, to be reflected in a very strong trade for stock markets and significantly lower Treasury yields across the curve.
