Smaller Job Gains Likely Temporary
- The nonfarm payroll gain for March came in at 98,000, much lower than the expected 180,000. However, the household series was unexpectedly strong. The jobless rate fell to 4.5 percent, while underemployment improved significantly, suggesting the labor market continued to absorb excess slack. Weather may have played a role in the soft payroll numbers; Wells Fargo expects job gains to ramp back up in coming months.
- Other data released this week point to an economy expanding solidly, though perhaps not as exuberantly as post-election sentiment measures suggested.
Foreign Economic Growth Remains Reasonably Solid
- The Tankan index of Japanese business sentiment, which has a reasonable degree of correlation with Japanese GDP growth, strengthened further in the first quarter. Acceleration in global economic activity is leading to strength in Japanese exports.
- Monthly economic indicators show that real GDP in the Eurozone grew at a modest pace in the first quarter as well, but the upcoming French presidential election poses a downside risk to the near-term economic outlook.