In this month’s Business Edge Report, we explore what slower job growth, a shifting yield curve, and changing investor sentiment could mean for hiring, borrowing, and strategic decision-making in your business.
Employment Trends: Slower Job Growth
Key Market Indicator
The Bureau of Labor Statistics (BLS) reported +177,000 nonfarm payroll additions in April, below the 6-month average of +193,000. The unemployment rate held steady at 4.2%.
Why It Matters
Job growth is cooling but remains stable. For business owners, this could signal a shift from a highly competitive hiring environment to a more balanced labor market. While hiring remains possible, slower growth may give companies more leverage in compensation and recruiting. However, the steady unemployment rate suggests consumers still have spending power. This may be something to monitor if your business depends on consumer demand.
Yield Curve and Rate Volatility: A Smoother Slope
Key Market Indicator
The 10-year minus 2-year Treasury yield sits at +49 bps, continuing its normalization. Rate volatility (MOVE Index) dropped from 140 to 101, closer to the long-term average of 94.
Why It Matters
A more “normal” yield curve (long rates higher than short rates) often reflects growing confidence in future economic growth. For business owners, this matters for two key reasons: 1) it may reduce uncertainty in financing decisions, and 2) it gives insight into the trajectory of interest rates. Calmer rate volatility can support more predictable borrowing and investment planning.
Leading Economic Index: Contraction, but Trending Up
Key Market Indicator
The Conference Board’s LEI was -3.5% year-over-year in March, slightly down from February’s -3.0% but continuing an upward trend from its April 2023 low.
Why It Matters
The LEI is a composite of indicators that tends to signal turning points in the economy. While still in contraction, its improvement suggests the worst may be behind us. Business owners may want to prepare for potential future expansion by evaluating capital needs, hiring plans, or new growth opportunities now, while others are still hesitant.
ISM Services PMI: Steady Expansion
Key Market Indicator
The Institute for Supply Management (ISM) Services PMI came in at 51.6 for April, beating consensus (50.2) and marking ten straight months of growth.
Why It Matters
If your business is service-oriented or sells into the services industry, this is a good sign. Continued expansion means demand is holding up. However, growth has moderated, so it may be worth staying nimble. Focus on efficiency, client retention, and delivering value as the pace of expansion steadies.
ISM Manufacturing PMI: Back into Contraction
Key Market Indicator
The ISM Manufacturing PMI posted 48.7 for April, below 50 for the second month, indicating contraction after brief expansion in early 2025.
Why It Matters
For manufacturers or businesses tied to the industrial supply chain, this dip points to potential slowdowns in production or inventory investment. Business owners should evaluate their supplier risk, pricing power, and customer demand, particularly if their business depends on goods vs. services
Housing Market: Regional Weakness, High Mortgage Rates
Key Market Indicator
The National Association of Realtors (NAR) reported pending home sales were -0.6% year-over-year in March. Weakness showed in most regions, except for modest gains in the Midwest. The average 30-year mortgage rate remains high at 6.8%.
Why It Matters
Higher mortgage rates continue to pressure the housing market. If your business is tied to real estate, construction, or housing-dependent sectors (like home improvement or mortgage services), regional trends matter. Strength in the Midwest offers a counterpoint to broader national softness. Now may be the time to review regional performance in your business and adjust strategy accordingly.
Investor Sentiment: From Fear to Greed
Key Market Indicator
The AAII Sentiment Survey shows 35.9% bullish vs. 44.4% bearish. The CNN Fear & Greed Index rose sharply to 70 (greed) from 18 (extreme fear) a month ago.
Why It Matters
Sentiment drives markets and business confidence. Rapid shifts like this can influence everything from equity valuations to customer buying behavior. For privately held business owners, this could impact investor appetite, M&A activity, or even customer confidence. If you’re planning to raise capital or sell part of your business, understanding market psychology is key.
Actionable Takeaways
- Rethink Hiring Pace: Slower job growth may reduce labor competition. Revisit hiring strategies and compensation plans.
- Lock in Financing: With rate volatility easing and the yield curve stabilizing, now may be a good time to evaluate or secure business financing.
- Watch Regional Trends: Housing weakness isn’t uniform. If your business is location-sensitive, align efforts with stronger regions like the Midwest.
- Lean into Services: The services sector continues to grow. Consider how your business can serve or pivot toward service-oriented clients.
- Reassess Growth Strategy: With leading indicators improving, this may be the right time to evaluate your next move. Consider whether to expand, streamline, or shift resources to areas showing stronger performance.
