- The birth/death model is likely to make smaller contributions to payroll growth across spring and summer.
- The wave of pandemic-inspired startups is yet to fade from the model, but the turning point is imminent.
- Consumers are becoming increasingly worried about the labor market; spending growth will slow.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
One big jump is not a trend, but a rising trend is now due
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Jobless claims likely will drop this week, but the sudden spike week is a warning sign of trouble ahead.
- Consumers’ confidence likely has peaked, but changes to the Michigan survey will overstate any softening.
- The new method likely will lift the survey's five-to-10-year inflation expectations measure, slightly.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We see a sharp downturn in payrolls soon, despite the rock-bottom level of initial jobless claims.
- Claims tend to lead payrolls during an upturn, but deteriorate alongside payrolls during a downturn.
- Revisions to payrolls are uncorrelated with the initial response rate; April's weak initial print will survive.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- CPI health insurance prices are set to slow sharply from April, thanks to methodological changes.
- Prices should flatline from April to September, but the 1½% trend in the PCE measure will continue.
- MBS data on mortgage applications likely nudged up last week, but from a very low base.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Banks are continuing to tighten credit availability for business and consumers.
- The real cost of bank loans to small businesses is approaching 8%; no wonder they are cutting costs.
- The lag between banks' willingness to extend consumer credit and lending flows is long; a slowdown lies ahead.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
An ugly report, but don't call it stagflation.
Oliver Allen (Senior US Economist)US
- April's slowdown in payrolls looks like real weakness; revisions likely will push the numbers down further.
- Near-zero growth in payrolls lies ahead if the NFIB survey retains its status as the best leading indicator.
- The ISM services survey has joined the growing list of surveys showing that labor demand is weakening.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
An uptrend in initial claims is probably still in the pipeline.
Oliver Allen (Senior US Economist)US
- Both the Homebase data and the NFIB survey signal slower job growth in April, but the numbers are noisy.
- One softer print would not trigger a Fed response, but it would make the May number critical for markets.
- The ISM services survey likely will provide further reassurance on the underlying inflation outlook.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Chair Powell batted away talk of a further rate hike, and hinted that labor market fears are emerging.
- Everything will change if payroll growth slows sharply; that won't happen overnight, but it is coming.
- Still no signs of a real manufacturing recovery, and inflation risks from the sector are minimal.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Consumers starting to feel the pinch.
Oliver Allen (Senior US Economist)US
Striking, but not a national bellwether.
Oliver Allen (Senior US Economist)US
Disappointing, but not the end of slowing employment costs inflation.
Oliver Allen (Senior US Economist)US
- The FOMC will likely take a hard line on easing today, despite abundant warnings of a weaker labor market.
- The disappointing Q1 ECI is not definitive; leading indicators signal downward pressure on wage growth.
- Ignore the ADP and JOLTS job openings today; the JOLTS quits rate matters far more.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Year-over-year growth in the ECI likely fell below 4% in Q1, almost back to its inflation target-consistent rate.
- California fast food price rises driven by the minimum wage hike will have a microscopic impact on the CPI.
- Ignore the 3.9% Q2 growth forecast from GDPNow; its estimates are often way off this early in the quarter.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
