Markets got off to a good start this week following the long weekend as the March jobs report, which was released Friday, was better than expected.
Major indices post big gains Monday with the S&P 500 gaining 1.44% while the NASDAQ rose 1.67%. The strong start continues momentum from last week where the S&P added 2.82% as the White House unveiled its new $2.25 trillion infrastructure focused stimulus plan and the Suez Canal was finally reopened.
Jobs ReportWhile U.S. equity markets were closed Friday, the Bureau of Labor Statistics did not wait to release the Employment Situation Report for the month of March. The economy added 916,000 jobs last month, significantly beating out analysts estimates for 630,000 new jobs. The unemployment rate dropped to 6.0% from 6.2% in February which was what economists were expecting.
Despite the significant increase in jobs added and slight drop in unemployment rate, the labor force participation rate moved only from 61.4% to 61.5%. The labor force participation rate still remains significantly below the 63.3% reported in February 2020 before the pandemic struck. Fed chair Jerome Powell and others have cited this drop in participation as evidence that the real unemployment rate is still closer to 9-10% than the reported 6%.
Additionally, the drop in unemployment was primarily due to the number of people on temporary layoffs decreasing. Temporary unemployment dropped by 203,000 to a total of 2.03 million last month while permanent job losers slightly dipped from 3.49 million to 3.43 million. The downward trend remains promising but temporary layoffs are still 1.3 million higher than in February 2020 while permanent unemployment is 2.1 million higher in that same period. The unemployment rate still has a long way to go before getting down to 3.5% again and the total number of unemployed at 9.7 million remains 4.0 million higher than before the pandemic.
Even still, the March jobs report showed strong growth with adding nearly a million jobs and bringing down the reported unemployment rate an additional 0.2%.
Economic DataWith the jobs report released last week, economic data is light this week with unemployment claims reports on Thursday and Producer Price Index (PPI) released on Friday. Initial claims are expected to drop to 690,000 from the previous week’s 719,000 claims. Meanwhile, PPI is expected to show the same increase in March that it did in February with core PPI expected to rise 0.2% while PPI gains 0.5%.
EarningsEarnings remain light this week as well with earnings season ramping up next week as some of the largest financial institutions will report quarterly earnings then. Some of the bigger names expected to report financial results this week are Constellation Brands (STZ), Levi Strauss (LEVI), and Paychex (PAYX) which will all release first quarter earnings for 2021.
Economic Events this Week
- 10:30 a.m. - EIA Crude Oil Inventories
- 8:30 a.m. - Initial Claims
- 8:30 a.m. - Continuing Claims
- 8:30 a.m. - PPI
- 8:30 a.m. - Core PPI
Earnings Reports this Week
Before the bell: PAYX, GBX After the bell: SGH
Before the bell: RPM, LW, MSM After the bell: RGP
Before the bell: CAG, STZ, After the bell: LEVI, PSMT, AFYA, WDFC
After the bell: JKS
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