INSTANT VIEW: Non-farm payrolls jump in April

NEW YORK (BestGrowthStock) – U.S. nonfarm payrolls grew at the fastest pace in four years in April as private sector employers ramped up hiring, raising the strong possibility the labor market recovery may be picking up steam.

KEY POINTS: * Employers added 290,000 jobs in April, the Labor Department said. It revised figures for February and March to show 121,000 more jobs were added than previously thought. * The unemployment rate rose to 9.9 percent as the size of the labor force increased. * Analysts polled by Reuters had expected nonfarm payrolls to rise 200,000 last month and the jobless rate to remain unchanged at 9.7 percent. The median forecast from the 20 most accurate forecasters was for a payrolls increase of 188,000. * Private sector employment increased 231,000, also the largest gain since March 2006, after rising 174,000 in March. Private payrolls have now grown for four months. Census hiring contributed 66,000 jobs.

COMMENTS:

CARY LEAHEY, MANAGING DIRECTOR AND ECONOMIST, DECISION ECONOMICS, NEW YORK:

“The trend is very good. We should start playing ‘Happy Days are Here Again.’ We got a very solid increase in job creation with headline payrolls up 290,000 and private payrolls up 230,000, a very strong gain. We also got an upward revision to March.

“The only fly in the ointment is that average hourly earnings are still decelerating so it takes a little bit of oomph out of the report.

“What restrained the bond market’s reaction was the rise in the unemployment rate to 9.9 percent from 9.7 percent. But paradoxically the unemployment rate is very good news because a ton of people found jobs — 550,000 according to the household survey — but even more people started to look for jobs. That means that people’s perception of the labor market has started to improve so much that many people started to look for jobs. A large fraction of them found those jobs, but not all of them. The unemployment rate rose — for all the right reasons.

“The markets realize that with the unemployment rate at 9.9 percent, for whatever reason, the Fed will not raise rates. So you cannot conclude that this job market improvement makes the Fed more likely to raise rates in the next three to six months. The fact that the unemployment rate is almost back to 10 percent makes the Fed very leery of raising rates. They want to fend off the dreaded Fed audit. If the Fed raises rates just as the job growth starts to return, Congress might respond that this is a good time to audit you guys because we don’t understand your thinking.”

PETER JANKOVSKIS, CO-CHIEF INVESTMENT OFFICER, OAKBROOK INVESTMENTS LLC, LISLE, ILLINOIS:

“Overall the payrolls numbers themselves look pretty strong, obviously a much better than expected increase in payrolls. The increase in unemployment though will counterbalance that somewhat. And also the other thing that I saw that was a little troubling was that the average hourly earnings actually were not quite as strong as people were looking for. So kind of a mixed bag.

PAUL SORBERA, PRESIDENT, ALLIANCE CONSULTING, NEW YORK:

“This was better than expected, and February and March were upgraded. It wasn’t that long ago that we were losing 400,000 jobs. Temporary workers went up as well, which is a very good leading indicator, because people hire the temps first.”

“We need to continue to see this and certainly if the trend continues…it’s going to be very positive.”

JOE MANIMBO, CURRENCY TRADER, TRAVELEX GLOBAL BUSINESS PAYMENTS, WASHINGTON:

“Overall, it’s a solid number. We did see a better-than-expected creation of U.S. jobs in the month of April. We also saw a smaller amount of jobs created as a result of temporary census hiring. However, the one concern is that the jobless rate unexpectedly increased to 9.9 percent and that’s helping to dampen a little bit of the enthusiasm that we saw as a result of the better-than-expected headline number. Overall, it’s a good number, particularly since the previous month was revised to show a larger than expected creation of U.S. jobs.

“We’ve seen the dollar trying to move back toward its 14-month high (against the euro) and this will certainly be an excuse to test new highs. But keep in mind, this is Friday and there have been some really turbulent moves this week, so we could see a little bit of profit-taking, which would maybe at the end of the day help the euro.”

MICHAEL MORAN, CHIEF ECONOMIST, DAIWA SECURITIES AMERICA, NEW YORK:

“It’s a highly positive report on the economy. The solid increase in April and the upward revisions to March and February were impressive and showed a good pace of new job growth. Most of the April increase occurred in the private sector. The manufacturing and construction areas of the economy produced jobs, implying that those sectors are turning around. These are cyclical sectors so that implies the business cycle is also turning.”

HOWARD SIMONS, STRATEGIST, BIANCO RESEARCH, CHICAGO:

“This is what you’d expect in an economy that’s clearly in a recovery, and we should expect this to continue.

“But, this is also not so great news for the (U.S. Treasury) bond market, because it means they’re going to have to raise rates soon.”

BILL SCHULTZ, CHIEF INVESTMENT OFFICER, MCQUEEN, BALL & ASSOCIATES, BETHLEHEM, PENNSYLVANIA:

“It certainly didn’t disappoint on the number of new jobs created but I guess the question now is: is the overhang from the stock market going to influence it more than the bond performance given the payroll data.

“It didn’t look like it moved too much on the bond side. I think all eyes are going to rest on the stock market here. It’s amazing that you could say the jobs report may not be the big mover on a Friday of a jobs report number. I think we’re watching overseas and what’s going on in the equities market.”

KURT KARL, CHIEF U.S. ECONOMIST, SWISS RE, NEW YORK:

“We’ve been waiting for this for a long time. Finally we are getting close to 300,000, so that is very good news. And it is very nice that it is only 60,000 or so of public jobs, which is what everyone thought it was going to be. A good report.

“We will probably get some disappointing news over the next few months, from time to time, but I think we are moving into this very reassuring range of strong employment growth. It is consistent with the way the economy is going.”

SEAN SIMKO, FIXED-INCOME PORTFOLIO MANAGER, SEI, OAKS, PENNSYLVANIA:

“The jobs report tells us there was widespread growth within the labor market from manufacturing to temporary jobs. The battle that’s been going on between improving fundamentals and the fear of sovereign debt was at least for now won by the fundamentals, with the Treasury market selling off and the stock market futures positive.”

FRED DICKSON, CHIEF MARKET STRATEGIST, D.A. DAVIDSON & CO.,LAKE OSWEGO, OREGON:

“It’s a blowout number on the upside. It was tempered by the fact that the unemployment rate moved up. I would say that would give the (stock) market a little bit of a lift after yesterday’s wild ride.”

DAN COOK, SENIOR MARKET ANALYST, IG MARKETS, CHICAGO:

“The headline number looks outstanding. 290,000 is very good to see, especially after a day like yesterday. This should help us out. After a week with so many down spots, this is a good way to wrap things up.

“The unemployment rate did jump, but that’s not something I’m overly concerned about at first blush. With so many people going back into the labor market, that number could be artificial.”

MARKET REACTION: STOCKS: U.S. stock futures held gains. BONDS: U.S. Treasury debt prices added losses. DOLLAR: U.S. dollar trimmed losses versus the euro, extended gains vs yen.

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INSTANT VIEW: Non-farm payrolls jump in April