May 2024 Market Trends Report
How can the April jobs report be “historic”, “changed little” and “cause for concern” all at once?
The phrase “changed little” is a familiar refrain in the Employment Situation Summary from the U.S. Bureau of Labor Statistics.
However, at 3.9%, the unemployment rate continues its longest streak below 4% (for the 27th consecutive month) since the 1960s, ticking up slightly from last month.
Additionally, the number of jobs added (175,000) undercut Wall Street’s expectations that nonfarm payrolls would increase by 240,000, concluding the first month of Q2 with the smallest jobs gain in six months.
Average hourly earnings are also growing at a rate below expectations, increasing 3.9% from last year — the slowest pace in nearly three years.
The Cooling Market Concerns Some, Not Others
These factors point to a cooling labor market that could be both good news for inflation and cause for concern if weaker-than-expected reports continue through the year, according to Indeed Hiring Lab Research Director Nick Bunker.
On the other end, some economists, including Harvard Professor and Economist Jason Furman say the April report is “quite reassuring”, showing “an economy that could be headed to the soft landing of reasonable inflation and low unemployment”.
What this means for the long-term economy will come into focus in the coming months.
Overall, the jobs report shows steady demand for skilled workers, while a higher unemployment rate for business services professionals means demand is slowing across many professional sectors.
Jobs Market Overview: April 2024
3.9%
Overall unemployment rate
The unemployment rate slightly increased yet continues its streak below 4% for the 27th month straight.
175k
Jobs added
The Employment Situation Summary reported decent job gains across most sectors — with healthcare contributing to half of all gains.
62.7%
Labor force participation rate
Labor force participation held its five-month high from March.
Industry Employment Trends
OVERALL ECONOMY
+175k
Monthly job change
(+1.8% YoY Difference)
| Industry | Monthly Job Change | YoY Difference |
| Manufacturing | 8K | +0.2% |
| Automotive | -0.1k | +2.9% |
| Warehousing & Storage | 7.6k | -4.3% |
| Architectural & Engineering | -0.1k | +2.2% |
| Construction | +9k | +3.2% |
Source: Bureau of Labor Statistics' Employment Situation Summary
Sector by Sector News: April 2024
Manufacturing
April Manufacturing PMI: 49.2%
Last month, the Institute for Supply Management (ISM) reported economic expansion in the manufacturing sector after downshifting for 16 months straight.
In April, economic activity diminished again — with the Manufacturing PMI falling to 49.2%* — down 1.1 percent month over month. Additionally, 34% of manufacturing gross domestic product (GDP) contracted in April (in comparison to 30% in March).
Market conditions are shrinking across all indexes (from new orders and backlogs to inventories and employment) with the exception of imports, production and prices, giving no relief to the consumer despite decreased demand.
However, with demand in the initial stages of recovery, the ISM suggests continued improvement within the sector: “Although demand improvement slowed, output remains positive, and inputs stayed accommodative.”
*A PMI reading below 50% suggests economic activity is contracting.
According to ISM:
Manufacturing industries in growth in April:
- Nonmetallic Mineral Products
- Printing & Related Support Activities
- Primary Metals
- Textile Mills
- Electrical Equipment
- Appliances & Components
- Petroleum & Coal Products
- Transportation Equipment
- Chemical Products
- Plastics & Rubber Products
Manufacturing industries in contraction in April:
- Miscellaneous Manufacturing
- Machinery
- Furniture & Related Products
- Wood Products
- Food, Beverage & Tobacco Products
- Fabricated Metal Products
- Paper Products
Construction
In our last Market Trends Report, we reported the surprising strength of the construction industry. However, job openings took a tremendous downturn in April — with a loss of 182,000 openings — dropping by 39.9% month over month.
The numbers look grim, yet Associated Builders and Contractors (ABC) claims that overall, the jobs report shows durability in the construction industry thanks to ongoing megaprojects, including data centers, manufacturing plants and public works projects.
According to ABC Chief Economist Anirban Basu: “While there is observable weakness in certain industry segments, particularly in the challenging office market, ongoing spending growth in other construction segments has thus far more than fully countervailed that softness.”
Basu also claims the “dismal number likely reflects a statistical aberration rather than a legitimate decline in demand. Accordingly, these data should not be viewed as a sign of an industry slowdown, at least not without another month or two of data to corroborate it.”
Warehousing & Storage
April Logistics Manager’s Index (LMI): 52.9
The March LMI came in hot with the highest growth rate in 18 months (58.3). April’s index followed up with the slowest rate of growth in 2024, breaking a four-month trend of increasing rates of expansion.
The catalyst of the April cooldown was a sharp contraction
in the first half of the month influenced by a decrease in expanding inventory
levels, which trickled down through the supply chain
— from warehousing to transportation
capacity.
The index recovered from this pullback later in the month, shifting from contraction (at 46.8) to growth (at 56.5), averaging moderate growth in April reflected by the 22,000 jobs added in transportation and warehousing.
The LMI reported: “It will be interesting to see if that trend continues into May, or if there were other forces at work causing some type of aberration. On that front, it should be noted that the second half of April is much more consistent with recent trends than the sharp contraction we observed in the first half of the month.”
According to LMI:
Growth is increasing at an increasing rate for:
- Inventory Costs
- Warehousing Capacity
- Transportation Capacity
Growth is increasing at a decreasing rate for:
- Inventory Levels
- Warehousing Utilization
- Warehousing Prices
- Transportation Utilization
Growth is contracting for:
- Transportation Prices