The week in review
- Job openings declined to 8.5M in Mar.
- Nonfarm payrolls increased 175k in Apr.
- Wages grew 0.2% m/m (3.9% y/y) in Apr.
The week ahead
- 1Q24 SLOOS
- Prelim. consumer sentiment
Thought of the Week
This week’s chart shows labor force participation rates in the U.S., Eurozone, and UK. Each market is continuing to experience tightness with different underlying drivers. Remarkably, the U.S. has added 2.8 million jobs (1.8% growth) in the past year without a reacceleration in wage growth. In April, wages grew 3.9% y/y, the slowest pace since June 2021, and only 0.2% m/m. This is partly due to the strong recovery in participation rates in addition to a surge in immigration. In the Eurozone, the rebound in participation has been equally impressive. However, employment growth has been a less impressive 1.0% over the past year with less help from immigration. Finally, employment growth in the UK has been negative at -0.6%, due to less positive immigration trends and poor participation rates. During the pandemic, many decided they had saved enough to retire early or are experiencing long-term health issues that prevent them from working.
In all three cases, inflation has continued to trend downward despite a tight labor market. While relatively weaker GDP growth in the Eurozone and UK may lead to more near-term policy easing, all three central banks should be able to cut rates by year-end. High for longer rates in the U.S. may prevent a dollar decline in the short run, but it could weaken once the Fed begins cutting rates, bolstering the dollar-denominated return from overseas assets. Consequently, while the April jobs report continues to show a healthy U.S. economy, investors should examine the opportunities that exist today in less buoyant, but also much less expensive, overseas markets.
Chart of the Week: Source: FactSet, OECD, ONS, U.S. Department of
Labor, J.P. Morgan Asset Management. Participation rates are for
people between 16-64 in the UK, 15-64 in the Eurozone, and 18-64 in
the U.S.
Thought of the week: Source: FactSet, OECD, ONS, U.S. Department of
Labor, J.P. Morgan Asset Management.
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Originally Posted May 6, 2024 – Weekly Market Recap
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