After a slowdown in March, largely attributed to finicky weather, April’s job and wage growth is set for a rebound. According to payroll processor ADP, 204K jobs were added to the economy in April. Expectations ahead of Friday’s closely watched nonfarm payroll report are 192K additions, up from only 103K in March.
The unemployment rate has remained stagnant at 4.1% over the last six months, a 17-year low. Economists predict April’s employment data will report a tenth of a percent decline, notching it down to 4%.
With an annual projection of 2.7% wage growth in 2018, April is clocked in for a .2% increase. Hourly earnings in January rose more than expected, 2.9% from the prior year, which triggered a massive selloff in the markets as investors aggressively moved assets to the bond markets. Should April’s wage growth beat expectations, a market correction could be on the horizon.
Both 10 and two year notes are on the rise signaling the markets sentiment on the Federal Reserve. The recent increase suggests the market is bracing for the potential of four rate hikes in 2018 rather than the gradual thee bumps expected.
Friday’s jobs report from the Department of Labor will be closely monitored by investors worldwide. Good news for the economy could spell bad news for Wall St and vice versa. Thus, employing proper risk mitigation measures, such as protective stops and targets, is paramount.
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