Monday's Scoop: Clarity🌤️

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Here’s what you need to know today to inform your work, spending, and investments…

1. Hiring slowed, and unemployment rose in April.

2. The US business activity trended lower last month.

3. Corporate executives don’t have a lot of confidence in their sales projections.

Unemployment Rate: 3.9%
^{Still near the lowest rate in 50+ years}

Hiring slowed, and unemployment increased in April. The Labor Department reported employers added 175,000 more jobs last month, particularly in healthcare, transportation, and warehousing. That’s almost half the number of jobs added in March but still a healthy amount for a stable economy. The unemployment rate inched higher from 3.8% to 3.9% - still historically low. Overall, the report showed no dramatic shifts in the jobs market right now. Wages, unfortunately, aren’t rising very quickly, up only 0.2% in April and 3.9% over the past year. Average hourly earnings aren’t keeping up with the rising cost of living.

US business activity trended lower again last month. The Institute for Supply Management reported a contraction in the services sector, which makes up most of the economy. It was the first reported decline in activity since December 2022. The manufacturing sector, which accounts for only 10% of overall production, has been in a recession for over a year as consumers paired back their spending on stuff and factory orders slumped. A slowdown in new orders and employment across the services sector in recent months points to broader trouble across the economy.

The Market: ⬆️ +1.0%
S&P 500: 5,180.74
1Mo: -1% | 1Yr: +25% | 5Yr: +80%

The market continued its positive momentum on Monday. The jobs report on Friday revealed much slower hiring and increased unemployment in April, reassuring investors that the economy is not overheating and that policymakers may reduce borrowing costs sooner rather than later.

Companies have reported decent profits, but there’s little confidence in the year ahead. Most of the companies in the S&P 500 have provided their first quarter of corporate financial updates, and about 77% have reported higher profits than investors projected. That’s in line with a typical year. However, not many companies have been willing to offer guidance on the path of their future profitability. Only 19% of the S&P 500 companies have offered guidance so far. According to Bloomberg, of the companies that have offered profit projections, only 15% of the outlooks exceeded investors’ estimates, the second-lowest percentage since the pandemic. The scarcity of confident projections reveals how uncertain corporate leaders are about the months ahead.