From the Desk - Economic Commentary
Scott Hofer, Member Strategies Manager - 5/5/2026
U.S. equities opened higher this morning with all three major indexes advancing as oil prices recede and corporate earnings continue to post strong results. In economic data releases today, the latest Job Openings and Labor Turnover Survey (JOLTS) released today showed that U.S. job openings were essentially flat at about 6.87 million in March, coming in roughly in line with expectations and slightly below the prior month’s level. This indicates a labor market that continues to cool gradually, with demand for workers stabilizing after a steady decline over the past year. At the same time, hires increased modestly to around 5.6 million, while total separations changed little, suggesting limited momentum in both hiring and layoffs. Overall, the report points to a labor market that remains relatively stable but no longer tight, with fewer openings and subdued worker turnover compared to earlier periods.
In manufacturing and services, the final April S&P Global U.S. Composite PMI was revised down to 51.7, from the flash reading of 52.0, but still improved from March’s 50.3, indicating a modest expansion in private sector activity driven by a rebound in both services and manufacturing, albeit with only modest gains in new orders and employment. The Services PMI rose to 51.0, signaling a return to modest expansion after March’s contractionary 49.8, though it came in slightly below expectations and the earlier flash estimate. The improvement reflects a tentative recovery in service-sector activity, but overall growth remains subdued following disruptions tied to geopolitical tensions and higher energy costs.
In addition, today’s ISM Services report showed the April Business Activity Index rising to 55.9, up from 53.9 in March, indicating a reacceleration in current services-sector output. Overall, this component remained firmly in expansion territory, signaling continued growth in the largest part of the U.S. economy despite some mixed underlying trends. In short, today’s release highlights solid but uneven services-sector growth, with output picking up even as demand and labor conditions remain more fragile.
In housing, today’s U.S. building permits release showed permits at about 1.36 million (seasonally adjusted annual rate), coming in slightly below expectations and down sharply from the prior month’s revised 1.54 million pace. This reflects a continued pullback in permitting activity following a strong February, highlighting softer forward-looking construction momentum. The decline was broad-based, with both single-family permits falling modestly and multifamily permits dropping more significantly. Overall, the data signal a cooling in builder sentiment and future housing supply even as recent housing starts had remained relatively strong.
Also in housing, new single-family home sales increased to a seasonally adjusted annual rate of 682,000 in March 2026, rising 7.4% from February and 3.3% compared to March 2025, continuing a recent upward trend following February’s gains. At the same time, inventory declined slightly to 481,000 homes, down from both the previous month and the prior year, contributing to a tighter market. The months’ supply of homes also decreased to 8.5 months, reflecting reduced availability relative to sales pace. Home prices moved lower, with the median price dropping to $387,400—down 5.3% from February and 6.2% year over year—while the average price fell modestly to $503,100. Overall, the data indicates stronger sales activity alongside declining inventory and easing home prices.
Last, but not least, the U.S. trade deficit widened to $60.3 billion in March 2026, increasing by $2.5 billion (4.4%) from February as imports grew faster than exports. The deterioration was driven by a 2.3% rise in imports to $381.2 billion, outpacing a 2.0% increase in exports to $320.9 billion, reflecting strong domestic demand and investment. The goods deficit expanded notably, while a modest increase in the services surplus only partly offset the overall gap. Export gains were supported by higher petroleum and industrial shipments, while imports were boosted by capital goods, autos, and consumer products. Overall, the wider deficit indicates trade was a drag on first-quarter economic growth, as rising imports subtract from GDP.
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