Before today’s non-farm payrolls report, I noted that the low estimate in the Refinitiv survey was from Ian Shepherdson at Pantheon and asked him why. One of the things he highlighted was the softening National Federation of Independent Businesses survey of hiring intentions.
Despite generally strong seasonal biases in the April non-farm payrolls report, the data was weak at +175K vs +243K expected (Shepherdson was at +150K).
If the NFIB survey proves to be a good forecaster, there is still much more weakness in jobs to come.
Chart from @PantheonMacro
Historically, cracks in the jobs market tend to accelerate quickly as well. Rises in the unemployment rate have historically run much higher once we get the kind of 0.5 pp rise we’ve had so far. That’s likely why Powell highlighted the unemployment rate on Wednesday, saying that it would take “more than a couple” of ticks higher to get them to react. Well, this is one tick higher and we still have two more reports before the July FOMC and four more reports before the Sept FOMC.
unemployment rate