05/07/2021 | Press release | Distributed by Public on 05/07/2021 14:38
Key Takeaways:
Employment growth in April was far slower than the anticipated 1 million gain. Given other labor market indicators, namely the recent ADP employment report showing 742,000 gains in payroll employment and initial unemployment claims posting swift declines, it is possible that the April employment reading is a data anomaly, perhaps due to issues regarding atypical seasonal adjustments. But we believe there is a risk that firms are finding hiring new workers to be difficult, as suggested by anecdotes of labor shortages, as well as some business survey indicators. This, along with continued supply chain disruptions, represent downside risks to the near-term pace of the economic recovery. Labor demand appears to be strong still, as job openings in February were at an all-time high and average weekly hours and average hourly wages rose in April. Total job gains were also held back by a large decline in temporary help services employment. This may be the result of workers transitioning back to more permanent work positions. Even with a weaker-than-expected report, leisure and hospitality employment posted solid gains, which coincided with more COVID-related restrictions being lifted across the country, a trend we expect to see continue throughout the second quarter. The increase in light vehicle sales in April suggests that consumer demand remained healthy, supporting our outlook for further strength in consumer spending in the second quarter. The recovery in the business sector continued, with a strong first quarter of productivity growth and manufacturing remaining comfortably in expansion territory. Orders of core capital goods in March were solid and supports our outlook for strong business fixed investment in the second quarter. In housing, spending on new single-family construction and improvements suggest further support for residential investment, as does the modest loosening of credit standards. Both are positive signs for home purchase demand, though the current lack of available inventories will likely continue to limit the pace of home sales.
Ricky Goyette and Eric Brescia
Economic and Strategic Research Group
May 7, 2021
Opinions, analyses, estimates, forecasts and other views of Fannie Mae's Economic and Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR group bases its opinions, analyses, estimates, forecasts and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts and other views published by the ESR group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.