In this past week’s labor market reporting, the economy realized impressive employment gains and manufacturing sector strength. As a result, both exceeded expectations.
In spite of this positivity, mortgage rates ended the week with little change.
Impressive Employment Gains
Analysts finally learned the latest on Employment in the report released Friday, April 2nd, 2021. To the surprise of many, the data displayed impressive employment gains.
Overall, the United States economy gained 916,000 jobs. This result is far above the consensus forecast of 625,000. In addition, the prior month showed revised results to the addition of 156,000 jobs.
In particular, the hospitality and construction sectors exhibited strength. This is fantastic news given that both the hospitality and construction industries suffered at the onset of the coronavirus pandemic.
Impressive Employment Gains Lead to Unemployment Rate Decline
Because of the impressive employment gains, the unemployment rate saw a decline. Thus, the unemployment rate dropped from 6.2% to 6.0%. This result matched expectations.
On the other hand, the economy expressed a decline in average hourly earnings. Generally, economists consider average hourly earnings to be an indicator of wage growth. The average hourly earnings fell slightly from February, below the consensus for a modest increase.
Also, average hourly earnings rose 4.2% from this time last year. However, they decreased from last month’s 5.2%. Although the economy presented impressive employment gains, most of the job creation was found in lower-paying sectors. This directly led to the drop in average wages.
Manufacturing Sector Strength
Along with the impressive employment gains, the economy demonstrated unanticipated strength in the closely watched manufacturing data. The ISM national manufacturing index jumped to 64.7. This is well above the consensus forecast of 61.5. It is also the highest level since 1983.
With the ISM national manufacturing index, readings above 50 indicate sector expansion. This accounts for roughly 12% of the economy.
Consumer Confidence Starting to Rise
It’s no surprise that consumer confidence is climbing in the United States. This past week told a tale of optimism with the impressive employment gains and the manufacturing sector strength. Ultimately, consumer confidence jumped to its highest level since the beginning of the COVID-19 pandemic.
This index from the Conference Board jumped from 90.4 in February to 109.7 in March. In conclusion, consumer confidence soared far above the consensus forecast, achieving the best reading in a year.
Many factors bolster the rise in consumer confidence. Coronavirus vaccines continue to roll out across the nation. The United States economy reopening efforts heighten. Finally, a third wave of stimulus checks fueled consumer optimism about future economic conditions.
Looking Ahead After Impressive Employment Gains
Looking ahead after impressive employment gains, investors continue monitoring the United States economy. In line with recent trends, investors watch COVID-19 case counts in tandem with the vaccine distribution.
Beyond that, it will be a light week for economic data. Of note, the ISM services index comes out today (Monday, April 5th, 2021). PPI inflation data releases on Friday, April 9th, 2021.
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