Gimme forecasts are a rarity in Macro but the probability for a rate-of-change acceleration in the April labor data was about as asymmetric as it gets (with the exception of next month).
We’ll leave it to others to dogpile the survey minutiae but, suffice it to say, on both a headline basis and across the preponderance of internals the April Employment report were solid.
At the macro level what matters is simply this: Payroll Growth, Aggregate Hours Growth & Aggregate Income Growth all accelerated in April ... and will accelerate further in May.
As we re-highlighted yesterday (see: Early Look: a-May-zing?):
“…aggregate private sector income growth accelerated to its fastest pace in 6-quarters in 1Q. ….. Now, to be sure, consumption growth was underwhelming in 1Q and served as a drag from a GDP accounting perspective but don’t conflate the dip in consumption proclivity with a deterioration in consumption capacity. Collective household spending capacity improved alongside accelerating aggregate income growth in the 1st quarter. That’s a positive fundamental development.”
That underlying improvement in the household PnL will continue in 2Q and should see incremental benefit from #ReflationsRollover as consumers get a tax cut, in cost of living terms.
Yes, the benefit from favorable comp dynamics diminishes after May but, for the next couple months, acceleration will remain the 2nd derivative backdrop domestically across employment, income (& likely Consumption, by extension), Industrial Production, Durable/Capital Goods and Housing activity.
Have a great weekend.
Christian B. Drake
@HedgeyeUSA
