Strong report points to healthier trend in employment; unemployment rate falls to 7.5%

Strong report on employment through April points to healthier trend in employment; unemployment rate falls to 7.5% Nonfarm payroll employment surprised on the upside in April, rising 165 thousand, while gains in February and March were both revised materially higher, to 332 thousand and 138 thousand, respectively. The upward revisions to previous months along with the positive surprise in April indicate a healthier trend in employment than previously thought. Monthly gains averaged 212 thousand from February to April, well above an average of 167 thousand using the previously reported data and the Bloomberg consensus expectation for April. The implications for second-quarter growth of hours of the newfound strength in employment, though, were more than offset by a sharp drop in the workweek in April, suggesting three-tenths less growth of hours in the nonfarm business sector in the second quarter than we previously forecast. Data from the household survey were also … Continue Reading

GDP grew less than expected in the first quarter, but report details are favorable for the coming quarters

Real GDP rose at a 2.5% annual rate in the first quarter. This was 0.6 percentage point below our estimate. But the unexpected weakness was in inventory investment, which suggests less drag from this source over the next quarter or two. Growth of final sales, both total (1.5%) and excluding net exports (1.9%), was in line with our expectations, indicating no material change in our view of the underlying momentum in the economy. More encouraging still, final sales to private domestic purchasers, our preferred gauge of the underlying trend in economic activity, rose at a 3.3% annual rate, 0.4 percentage point above our estimate, and up from 2.5% annualized growth over the second half of last year. By itself, this suggests improved momentum heading into the second quarter. Implicit in the headline figure for GDP was a sharp increase in farm output. The contribution to first-quarter GDP growth was roughly … Continue Reading