JUST IN: US JOB DATA RELEASED!
Nonfarm Payrolls, 177K Vs. 138K Est. (prev. 228K) Unemployment Rate, 4.2% Vs. 4.2% Est. (prev. 4.2%) Hourly Earnings, 3.8% Vs. 3.9% Est. (prev. 3.8%) ▶️ The US labor market has remained resilient in April. No visible impact of the tariff announcement on employment dynamics (yet?) ▶️ The US economy added 177k new jobs in April (138k expected) after 185k in March. ▶️ February and March data were revised lower (-58k overall) but remain on a decent trend, consistent with a stable unemployment rate. ▶️ As a result, the unemployment rate remains stable at 4.2% (as expected). ▶️ Wage growth slowed down slightly, to +0.2% from +0.3% (+0.3% expected). Hourly earnings are up +3.8% YoY, stable compared to the previous month. Source: Bloomberg
China's exports decline 10% year-over-year, the largest drop in AT LEAST 15 years
China said it is evaluating the possibility of starting trade negotiations with the U.S. Senior U.S. officials have reached out recently “through relevant parties multiple times,” hoping to start tariff negotiations, China’s commerce ministry said. Source: Barchart
As we head into May, a big question for markets is of course whether the US is on a path to a recession or not.
On the positive side, we have not seen a meaningfully consistent erosion of activity yet. Hard data have been doing ok, earnings are resilient, spreads are tightening again, etc. On the negative side, US has not spiked its tariffs this high since the 1940s. It is thus not an easy question to answer. And as shown by the table below by Goldman, market's ability to predict a recession is not that good... It is actually a toss coin Source: zerohedge
UPDATE: Weekly jobless claims jump to 241,000, higher than expected
Source: Stocktwits
The Wall Street Journal on China's latest economic data:
"A gauge of new export orders fell in April to its lowest reading since Covid-19 was ravaging the country in 2022, while overall manufacturing activity in China was the weakest in more than a year." The sharp declines reflect both the "bring forward" to beat the US tariffs and the impact of these tariffs. Source: Mo El Erian on X, Macrobond
On April 29, the GDPNow model nowcast of real GDP growth in Q1 2025 is -2.7%.
The final alternative model forecast, which adjusts for imports and exports of gold, is -1.5% Source: Atlanta Fed
In Germany, potential economic growth has dropped to just 0.5%, mainly because of falling productivity.
The last time Germany saw potential growth above 1% was back in 2018 — also the last year when productivity made a positive impact. For the new government to hit its target of lifting potential growth above 1% again, reviving productivity will be crucial, especially as the workforce continues to shrink. (Source: Natixis thru HolgerZ)
Market-implied US recession chance: 23% (within the next year)
Source: Mike Zaccardi, CFA, CMT, Goldman Sachs
