The U.S. Labor Department announced on Friday (1st) that non-farm payrolls added 431,000 jobs in March, which was lower than expected by 490,000, but the unemployment rate fell to 3.6%, better than the expected 3.8%. The labor force participation rate rose slightly, wages and salaries Growth has also accelerated and the job market remains strong, paving the way for aggressive interest rate hikes by the Federal Reserve ahead.
March nonfarm payrolls report:
- Non-agricultural employment reported 431,000, expected 490,000, and the previous value of 678,000
- Unemployment rate at 3.6%, expected 3.7%, the previous value of 3.8%
- Average weekly hours worked 34.6 hours, expected 34.7 hours, previous value 34.7 hours
- Average hourly wage growth rate was reported at 5.6%, expected 5.5%, the previous value of 5.1%
- The monthly growth rate of average hourly wages was reported at 0.4%, expected 0.4%, and the previous value was 0%
- The labor force participation rate was reported at 62.4%, expected 62.4, and the previous value was 62.3%
The data shows that the labor market is still recovering strongly, with employers successfully filling near-record vacancies. Inflation, lower savings and steady wage growth might be factors that will attract more Americans to employment in the coming months. In addition, with the widespread lifting of epidemic prevention restrictions in US states, the new crown epidemic will no longer be a significant factor.
The job market remains strong
The March non-farm payrolls report showed that although job creation was only 431,000 less than expected, the unemployment rate fell to 3.6%, better than the expected 3.8%, the labor force participation rate rose slightly, wage growth also accelerated, and the job market remained strong.
Average hourly earnings rose 0.4% in March from February and 5.6% from a year earlier, the largest increase since May 2020. However, currently high inflation is gradually outpacing wage growth, causing wages to fall and starting to weaken consumer demand.
The labor force participation rate edged up to 62.4 percent, with the so-called 25 to 54-year-oldgoldParticipation rates for older workers rose to their highest level in two years.
The Fed’s dovishness fades
Officials including Fed Chairman Jerome Powell have expressed support in recent weeks for more aggressive monetary policy to rein in decades of high inflation, including a possible two-yard rate hike at the next meeting in May. Fed officials have repeatedly stressed that a strong job market is one reason the U.S. economy can handle a series of rate hikes that extend into next year.
The March non-farm payrolls report will also further dispel fears of a recession in financial markets and boost market expectations for a 2-yard rate hike by the Fed in May. The Fed last month raised its benchmark interest rate by 0.25%, the first rate hike in more than three years.
Last month, a number of Fed officials expressed their hawkish stance, supporting accelerated or aggressive interest rate hikes in order to quell inflation. Among them, some dovish officials turned hawkish in a very short period of time, which may affect the decision-making for the rest of the year. towards.
Wall Street Analysts’ Views
Moody’s Chief Economist Mark Zandi said the job market is like a machine. It has been hot for the past year, but it can’t stay like this for too long, otherwise it will overheat, and pointed out that the industries most affected by the epidemic are seeing job growth. , such as leisure, hospitality, and professional services.
As the coronavirus pandemic eases and services reopen, businesses can’t fill job vacancies fast enough, Bloomberg economists said. The increased bargaining power of workers’ wages, combined with high inflation and reduced savings, has created a strong incentive to work. This will pave the way for the Fed’s decision to raise interest rates by 2 yards in May.
Standard Chartered’s Steve Englander said the Fed is expected to take advantage of the anti-inflation awareness that prevails among the public and politicians to accelerate rate hikes. Even the relatively dovish Federal Open Market Committee (FOMC) policymakers had no objection, suggesting a consensus on the FOMC.
Market Reaction
After the March non-agricultural data was released, the interest rate on the US 2-year bond value surged to 2.45% before the deadline, as the market expected the data to support the Fed’s tougher policy.US dollar indexrose to 98.66.
The CME FedWatch Tool shows that the Fed has a 32.3% chance of raising rates by 1 size in May, a 67.7% chance of a 2 rate hike, and a 0% chance of a 3 rate hike; by June The probability of raising interest rates by 1 yard or 2 yards is 0%, the probability of raising interest rates by 3 yards is 24.9%, the probability of raising interest rates by 4 yards is 59.6%, and the probability of raising interest rates by 5 yards is 15.5%.