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Weekly Update 05/08/2026: Earnings Season Continues as Employment Rises

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Economic data

There was a heavy dose of government and private data released this week. No single figure provided clear and unambiguous guidance to the direction of the economy—no single data point ever does. But it did show that even with geopolitical challenges and rising price pressures domestically, consumers are finding a way. The Census Bureau reported that sales of new homes in the U.S. rose in March by more than forecast at an annualized 682,000 pace, the fastest this year. That was above the median estimate in a Bloomberg survey of economists, which called for a slower 652,000 pace. The median sales price of a new home fell 6.2% in March from a year earlier to $387,400, the lowest since July 2021. Particularly noteworthy was the fact that 22,000 homes priced in the $300,000-$400,000 range were sold, the most in that category in nearly five years. Thus, cheaper properties are definitely in vogue. New home sales are seen as a timelier measure of the residential market than purchases of existing homes, which are calculated when contracts close weeks or months later.  

The Institute of Supply Management released its services index for April. We are now seeing data which is being collected after U.S. involvement in the Middle East began on February 28. It showed the U.S. economy expanded at a more moderate pace thanks primarily to sharply higher input prices. The figure was 53.6, which remained above the 50.0 level signifying expansion. The level of prices paid jumped to 70.7, the highest level since 2022. That helped depress the new orders growth, slumping to a level of 53.5, the lowest since March 2023.

The main focus this week was on the labor market. Earlier on Tuesday, the Bureau of Labor Statistics released its Jobs Openings and Labor Turnover Survey (JOLTS) for March. Available positions fell to 6.87 million from a revised 6.92 million in February. The ratio of vacancies per unemployed worker stayed at 0.9 in March, a far cry from the 2-to-1 figure in early 2022. The so-called “quits rate”, which measures the share of workers voluntarily leaving their positions each month, ticked up slightly to 2% from 1.9% in the prior reading.

Today, the Labor Department released its nonfarm payrolls report and nationwide unemployment figure. Investors were eager for the results to see if the economy could show the first back-to-back monthly increases in payrolls in almost a year. The “low-hire, low-fire” state was in effect after yesterday’s initial jobless claims by the Labor Department which shows that filings have remained subdued. Claims rose by 10,000 to 200,000 in the week ended May 2 which was below the 205,000 median forecast in a Bloomberg survey of economists. Despite news of big job cuts at high profile companies, solid consumer demand has resulted in generally low firing across many industries and is often accompanied by a low amount of offsetting hiring.  

In April, nonfarm payrolls rose 115,000, beating the median estimate in a Bloomberg survey, which called for a 65,000 increase. In the first four months of the year, monthly payrolls have averaged 76,000, up from an average of about 42,000 during the same period last year. The unemployment rate was unchanged at 4.3%. The sectors seeing the most advances were healthcare, transportation, warehousing, and retail. While the headline figures were positive, there remained a cautious trend behind the numbers. The participation rate, which measures the share of the population that is working or looking for work, fell to 61.8%, the lowest since October 2021. And a broader measure of employment, which includes people working part time for economic reasons and discouraged jobseekers, rose to 8.2%, the highest so far in 2026. In a boost to workers, average hourly earnings rose 0.2% last month and 3.6% from a year earlier, helping to offset some of the higher cost of commodities since the start of the war in the Middle East.

What is the main takeaway? As usual, it comes back to the Federal Reserve and its view on monetary policy. Hiring has come in ahead of expectations, the unemployment rate—which is derived from a different survey of households rather than businesses—has not moved for two months and income growth seems to be solid if not improving. None of those facts build the case for easing of the federal funds rate, which currently is targeted in the range of 3.50%-3.75%. The futures markets are not pricing in any potential rate cuts through 2027. In fact, a tilt towards a neutral bias—which some dissenting Fed governors voiced last meeting—suggests a rate hike could be as likely as a rate cut. Next week’s inflation numbers will be key inputs into that decision. The Consumer Price Index will be released on Tuesday and wholesale price data from the government will be revealed on Wednesday. We will also get the latest retail sales data on Thursday, which will help confirm if March’s strong figures were the trend or an anomaly. Stay tuned!  

Company Events

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