This week, the biggest economic data will be released tomorrow. The US labor department will release the jobs numbers for the month of April. Traders expect the non-farm payrolls to grow to 184K, from last month’s 164k. They expect the unemployment rate to remain at 3.9% and the participation rate to improve to 62.9%. The U6 unemployment rate – which many call the real unemployment rate – to remain at 7.8%. The average hourly earnings are expected to rise by 2.3% from last month’s 2.2%.
This month’s employment data will be very important to the investment community. This is because it will help investors get an understanding about how the economy is doing.
Yesterday, ADP released the employment data for the private sector. The data showed that 178K people were employed in April, which missed the analysts’ estimates of 186K. In another survey, more than 41% of the respondents said that they were optimistic about the job market. This was the highest level since 2001. In addition, while the Trump administration has historically received low ratings, most people say they are supportive of his economic policies.
Recently, the media has focused on the state of employment in the country. A recent report said that several American cities were facing the challenge of finding people to employ. The Energy Information Administration (EIA) has said that the lack of enough truck drivers was a major challenge for the oil and gas industry. Another report said that some companies were offering 5-figure sign up bonuses. Millions of jobs have not been filled in the US. This is a good problem for a country to have because it tends to increase the wages of employees.
Yesterday, the Commerce Department released the preliminary GDP numbers. In the first quarter, the GDP growth slowed slightly than expected amid a downward revision to the inventory investment and consumer spending. The GDP increased at a 2.2% annual rate instead of the previously reported 2.3%. In the fourth quarter, the economy expanded at a 2.9% rate. In the second quarter, there are signs that the growth has gained momentum as companies boost their investment spending.
Yesterday’s data also showed that the Core Personal Consumption Expenditure (PCE) growth was at 2.3% which was lower than the expected 2.5%. This data measures the changes in the price of goods and services purchased by consumers for the purpose of consumption, excluding food and energy. Corporate profits in the quarter grew by 5.9% compared to the expected 6.0%. This was significantly higher than the 1.9% growth in the fourth quarter and was attributed to the success of the tax reform package. The GDP Price Index rose by 1.9%, which was lower than the expected 2.0%. This data measures annualized change in the price of all goods and services included in gross domestic product. It is the broadest inflationary indicator.
As shown below, the dollar has fallen this week as traders moved to safe assets following the Italian crisis. Tomorrow’s data might help change the trend.