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TD Securities analysts note that the US Nonfarm payrolls surprised to the upside in April, registering a 263k print after a marginally downward revised 189k figure in March.

Key Quotes

“The April number beat the expectations of both the market (190k) and our expectations (170k). Another month of strong services sector job creation led the better headline, posting a three-month high 203k print (helping to allay any lingering concerns about a slowdown in hiring).”

“Another retreat in the participation rate, down 0.2pp to 62.8%, contributed to a further decline in the unemployment rate to 3.6% from 3.8% in March “” a multi-decade low. The drop in the participation rate brings it below its 2018 average of 62.9%, raising doubts that labor force participation could improve further after reaching a multi-year high at 63.2% in January and February.”

“As we anticipated, average hourly earnings advanced 0.2% m/m keeping with its monthly March pace (which was revised up a tenth to 0.2%). This monthly gain maintained the annual pace of wages steady at 3.2%, following the weather-related zig-zags in January and February. Average weekly hours declined a tenth to 34.4 in April, staying at the lower bound of the 34.4-34.5 range in the series since October.”

“The April report allows the Fed to remain comfortably on hold for the next few meetings as it awaits more data, particularly on global risks and the inflation outlook.”