On the April Jobs Report
263,000 net payrolls is a big beat, on top of net upward revisions. The recessionary February payroll gains have been revised up twice now, but not by much – so it would seem that they mark the bottom in a small “undocumented recession” from Q4-2018 to Q1-2019 from which this morning’s numbers suggest we are recovering. This confirms our view that we are replaying the recovery from the “undocumented recession” of Q4-2015 and Q1-2016, which was triggered by all the same factors that triggered the more recent episode. There are contradictions in this morning’s numbers just as there were in February, especially the weak “household survey” employment data, and the large drop in labor force participation. Hourly wage growth was tepid and below expectations, and should not impact the Fed’s “patience.” But if inflation stays low, a consensus will emerge for a rate cut, and the Fed will have no wage argument to use against it.