Job offer at a pizzeria in Prospect Heights, Illinois, this Tuesday Nam Y. Huh (AP)
US payrolls have beaten analysts’ forecasts in each of the last 11 reports, but the March report seems to indicate some moderation. The US economy added 236,000 jobs and the unemployment rate remained at 3.5%, just a tenth down from February, which closed at 3.6%. Unlike January, when job creation surprised by a surge, analysts had expected 240,000 job creation last month. This slight difference could give the Federal Reserve a breather in tightening monetary policy ahead of its next meeting on May 3rd. Employment continued to grow in the leisure and hospitality, public administration, services and health sectors. The dollar appreciated against the euro this Friday after the Bureau of Labor Statistics released its monthly report.
According to analysts, the data is slightly worse than the central bank had expected in a month marred by the biggest upheaval in the banking system since the 2008 crisis, an event that briefly distracted the Fed from concerns about inflation financial stability. Despite the tentative slowdown in March, job creation since 2022 doubles the ratio of the roughly 100,000 jobs per month needed to sustain the country’s labor force growth rate.
Despite the massive layoffs in the tech and finance sectors, the job market remains strong, in fact February data has been revised upwards showing 326k job creation instead of the previously reported 311k. According to the Bureau of Labor Statistics, American employers added about 4.3 million jobs in the 12 months ended February, pushing the unemployment rate down to its lowest level in 53 years. July 2022 and last January stood out in this period.
The buoyant job market has made it difficult for the Fed to rein in inflation. The combination of strong hiring and higher wages has put pressure on prices, even as other sectors of the economy are already showing signs of slowing. But the labor market appears to be at a turning point. A Labor Department report released on Tuesday suggested employers were beginning to slow hiring. At the same time, the job abandonment rate, an indicator that Americans feel safe about leaving one job and looking for another, rose, a phenomenon known as the Great Quit.
Analogous to the Labor Report, there is a wealth of data on unemployment claims calculated weekly. Data released last week suggests that the labor market remains strong, although revisions to the data point to some emerging signs of relief.
Conflicting signals increase volatility in stock markets. After an impressive rally in the first quarter, rate-sensitive tech stocks fell for three days on Thursday as investors grew fears the Fed would be forced to raise rates even if it resulted in a recession.
The relevance of the employment data in the debate about whether or not the threat of recession is over is unquestionable. The Good Friday holiday closed the stock markets in the US today, so the reaction to the release of the data will not take place until Monday. Only the dollar has reacted, and strongly.
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