Stock Market Update

The stock market remains on track for a higher opening following this morning’s release of the April Employment Situation Report.

The report featured a 115,000 increase in nonfarm payrolls, a 4.3% unemployment rate, and a bump in the average workweek to 34.3 hours (from 34.2). This was not an indisputably strong employment report, however. Average hourly earnings growth was weaker than expected, the labor force participation rate dipped, and the U-6 unemployment rate, which accounts for unemployed and underemployed workers, increased.

The key takeaway from the report, though, may just be found in a number that looks good on the surface but could be a harbinger of lower spending activity if inflation pressures aren't controlled. We're talking about the 3.6% year-over-year increase in average hourly earnings, which leaves real earnings up just 0.3% when pitted against the March CPI report or up just 0.1% when measured against the latest PCE Price Index. That doesn't provide a lot of discretionary spending cushion without taking on debt or dipping into savings.