Unemployment Falls, Payrolls Better-Than-Expected, Factory Orders Jump

- The Change in Non-farm Payrolls for April was -20K versus estimates of -75K and -81K in March.

- The Unemployment Rate for April fell to 5.0% versus estimates of 5.2% and 5.1% in March.

- Average Hourly Earnings for April rose .1% versus estimates of a .3% gain and a .3% gain in March.

- Factory Orders for March rose 1.4% versus estimates of a .2% increase and an upwardly revised -.9% decline in February.

BOTTOM LINE: The US lost fewer jobs than forecasts in April, and the unemployment rate dropped, signaling that the slowdown may be milder than economists had expected, Bloomberg reported. The construction industry cut 61,000 jobs during the month. Service industries, which include banks, insurance companies, restaurants and retailers, added 90,000 jobs last month, the most this year. The advance was propelled by business and professional services, along with health and education jobs. The current unemployment rate of 5.0% remains well below the 20-year average of 5.4%, notwithstanding significant housing-related job losses. Average Hourly Earnings are now growing 3.4% year-over-year versus the 20-year average of 3.3%. I expect the job market to improve modestly over the intermediate-term as companies gain confidence in the economy, fiscal/monetary stimuli take hold, inflation decelerates, the American Axle strike ends, exports continue to boom and the drag from housing subsides.

Orders to US factories rose more than forecast in March on strong demand for US products from overseas customers, Bloomberg reported. The US trade deficit shrank in the first quarter to the lowest level in more than five years on record exports. Excluding orders for transportation equipment, demand rose 2.2%, the most in a year. Orders for machinery surged 6.4% during March. Shipments of non-defense capital goods excluding aircraft, which are used to calculate GDP, rose 1.1% versus a 1.7% decline in February. Orders for military gear fell 5.5% in March. Aircraft orders jumped 6.6% and automobile bookings increased 1.4%. Total sale at manufacturers rose 1.1% in March versus a 1.9% decline in February. The number of goods on hand was unchanged at 1.27 months’ supply at the current sales pace. I expect Factory Orders to rise again in April. The US Dollar Index is rising .21% and the 10-year yield is rising 10 basis points on today’s better-than-expected economic data.