Insights and Market Perspectives

U.S. unemployment hits 18-year lows

Author: Portfolio Specialist Group

May 7, 2018

AGF Weekly Perspectives

“A recap of last week’s top economic news and what’s to come”

U.S. unemployment reaches 18-year low

  • U.S. nonfarm payrolls increased by 164,000 in April, missing consensus expectations for a second-straight month. Services sectors supported much of the gains with positions added in professional and business services, as well as the education and health category. Goods-producing sectors were largely positive, led by robust hiring in manufacturing.
  • Despite weaker-than-expected job additions, the U.S. unemployment rate fell to 3.9% and the lowest level since 2000 as the labour force declined by over 200,000 participants.
  • Wage growth was subdued in April with average hourly earnings unchanged at 2.6%.

Eurozone data showing signs of cooling

  • Eurozone economic growth eased in the first quarter of 2018 with GDP rising 0.4%, or 2.5% annualized. While positive, the economy showed signs of cooling after three consecutive quarters of 0.7% growth.
  • Inflation also slowed more than expected to 1.2% annualized in April, down from 1.4% in the prior month. Core inflation also decelerated to 0.7% annualized and well below the central bank’s target.
  • Also reported, retail sales were relatively flat in March, rising only 0.1% and missing expectations for a 0.5% gain. Sales were up 0.8% on an annualized basis in March, which is a full percentage point lower than levels recorded in February.

Canada’s economy improves

  • Canada’s GDP grew by 0.4% in February and recorded the strongest gain in nine months after a slight drop in January.
  • Growth was largely driven by a 2.4% gain in the mining, oil and gas sector, which rebounded after maintenance-driven declines in the prior month. Manufacturing (+1.0%) and construction (+0.7%) also reported strong growth.
  • Overall, 15 of 20 sectors reported higher activity. The real estate, rental and leasing category was one of the few negatives, and has declined in consecutive months for the first time since 2010.

Other economic news

  • The U.S. Federal Reserve (Fed) unanimously voted to leave rates unchanged at 1.5% to 1.75% with consensus expectations calling for a June rate hike. The Fed noted inflation is close to target, but described price pressures as “symmetric”, hinting that deviations above the target will be treated equally as deviations to the downside. PCE, the Fed’s preferred measure of inflation, reached 2.0% in March, while core PCE rose to 1.9%.
  • The ISM U.S. Manufacturing PMI fell 2.0 points to 57.3 in April due in part to rising raw materials costs and shortages of skilled workers. Overall activity remains strong, however, coming off of cycle-highs in February. The non-manufacturing index fell an equal amount to 56.8 in April, though recorded a 99th straight month of expansion (levels above 50.0).

What’s to come

Canadian unemployment and U.S. inflation

  • Canada’s unemployment rate will be updated on Friday, along with housing data during the week. U.S. inflation is out Thursday, while the in U.K., the Bank of England will decide on interest rate policy.

Download the Summary

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit

© 2018 AGF Management Limited. All rights reserved.

More articles like this.

Inversion perversion: Why the yield curve may not be a surefire signal of the next recession

This time around, the yield curve may not be in such a rush to flip upside down and, because of that, it’s not necessarily the same surefire sign of what’s to come.

Read More

Gains may be tougher as the bull runs into the late cycle

The recent selloff in equity markets may not signal an immediate end to the bull run, in fact markets have largely seen positive returns this week, but further gains are only going to get harder to come by at this late stage in the cycle.

Read More

Stormy weather: Markets are roiled by the hurricane and the thunder created by the Fed

AGF’s Steve Bonnyman gives his perspective on recent market volatility, driven by trade disputes, a president fighting with the Fed, and how investors should position themselves going forward.

Read More