The employment report for April came in just right, not too hot and not too cold.
At 223,000, it was a bit below expectations, but not meaningfully so. More important, it was back above the 200,000 threshold and well above the 126,000 of last month, prompting immediate sighs of relief all around. As expected, the March number now looks like a blip rather than the start of a downward trend.
Overall, a positive showing
Despite the strong headline number, though, there were signs of weakness. March jobs were revised down from 126,000 to 85,000, making a bad month even worse. Wage growth came in at only 0.1 percent month-on-month, also poor.
On the positive side:
- The participation rate rose, meaning more people were working overall.
- Both the unemployment and underemployment rates declined.
- Of particular interest, manufacturing jobs actually increased slightly, despite the strong dollar’s dampening effects on exports.
The takeaway: the recovery continues at a healthy pace. This is good for the real economy, and it should be good for the stock market as well. Although the jobs report was positive, it wasn’t so strong as to push the Fed to raise rates sooner than the September expectation, which should cheer up the market.
Once again, those who predicted doom based on one month of weak job growth have been proven wrong.
No need to worry about the dollar, either
Beyond employment, one of the perennial tropes of doom and gloom is the collapse of the U.S. dollar. This theory has become embarrassingly wrong as the dollar has moved to multiyear highs, so a new story has emerged: the dollar will be replaced as the world’s reserve currency.
I got an e-mail yesterday from a worried reader with a link to an article about the International Monetary Fund (“one of the most secretive and powerful organizations in the world”), which apparently plans to “announce a reserve currency alternative to the U.S. dollar.”
In fact, the article is alluding to the IMF’s possible inclusion of the Chinese yuan in the basket of currencies used for its Special Drawing Rights—a normal bureaucratic move that would simply formalize something that has, in essence, already occurred. The doomsayers are just dressing the situation in a Halloween mask to scare people into buying what they’re selling. (It's no surprise that the company behind the “expert” quoted in the article, which has been calling for the end of the world since before 2008, has been sued and convicted for fraud.)
Just as with the employment data, not only is the world not ending, but things seem to be getting better. As of today, that looks very likely to continue.