Is the Fed’s rate-hike cycle over?

Coming into today’s payrolls number, the sell-side community was hoping that last month’s unexpectedly poor payrolls number would prove to be a one off. It was not, and moments ago the BLS surprised with yet another poor jobs number, when it reported that in April, the US generated only 164K jobs, missing expectations of a 190K print, if modestly better than last month’s upward revised 135K number (from 102K).

Total 164,000 April payrolls, compared with an average monthly gain of 191,000 over the prior 12 months, with most job gains occurring in professional and business services, manufacturing, health care, and mining.

February payrolls were revised down from +326,000 to +324,000, while March was revised up from +103,000 to
+135,000, netting +30,000 job gains for the past two months. After revisions, job gains have averaged 208,000 over the last 3 months.

There was a silver lining: some of the miss could potentially be explained by harsher April weather, as workers who said they are unable to work due to bad weather was at 133K, nearly double the April historical average of 76k employees.

However, it wasn’t just the headline payrolls number that was a disappointment: the much more closely watched average hourly earnings print also missed, rising just 0.1% M/M, below the 0.2% expected, and 2.6% Y/Y, also missing the 2.7% expected.

Specifically, the average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.84. Over the year, average hourly earnings have increased by 67 cents, or 2.6%.Average weekly earnings rose a solid 2.9%, but below the 3.2% last month.

Average hourly earnings of private-sector production and nonsupervisory employees increased by 5 cents to $22.51 in April.

The average workweek for all employees was unchanged at 34.5 hours in April. Inmanufacturing, the workweek increased by 0.2 hour to 41.1 hours, while overtime edged up by 0.1 hour to 3.7 hours. The average workweek for production and nonsupervisory employees increased by 0.1 hour to 33.8 hours.