15:32
The US employment report for March is close to forecasts: 236,000 jobs were added to the US economy. The unemployment rate is lower than forecasts and stands at 3.5%. Hourly wages rose by 0.3% in March, the same as analysts’ forecasts.
The early expectation was for an addition of 229 thousand jobs and an unemployment rate of 3.6%. Last month the American economy added 311 thousand jobs and in January 504 thousand jobs were added, and the unemployment rate in February was 3.6%.
The employment report attracts a lot of attention from investors, mainly due to its effect on the Fed’s interest rate policy. As the data are stronger and indicate a tight labor market, the pressures for further interest rate increases increase. Usually the report has a big impact on what is happening on Wall Street, but this time because of “Good Friday” there is no trading and it only resumes on Monday.
Wall Street index futures are now trading steady with no significant movement.
08:06
Investors’ eyes are today (Friday) on the employment data for March in the US, which will signal the Federal Reserve’s path forward. The report will be published today at 3:30 p.m., even though there is no trading on the Wall Street stock exchanges for the Good Friday holiday.
● In the background of security tensions: the shekel loses height against the dollar, the euro at a two-year high
● After more than a year of war, the Russian economy begins to fall apart
According to the analysts’ estimates, the labor market is expected to show a slowdown and the number of new jobs will be only about 239 thousand, while in February the American economy added 311 thousand jobs and in January 504 thousand jobs were added. According to forecasts, the unemployment rate will remain at 3.6%.
During the week, a number of indicators have already been published, according to which it can be concluded that the Fed’s attempts to cool the market are beginning to bear fruit. Thus, yesterday the figure for the initial claims for unemployment benefits (for the week ending April 1) was published, which was higher than expected and stood at 228 thousand claims compared to an expected 200 thousand.
On Wednesday, the ADP employment index was published, which represents the change in the number of employed in the private sector during the month of March. The volume of new jobs in March increased by only 145 thousand, while the expectation was for an increase of 200 thousand, and when in February 261 thousand new hires were added. During the entire first quarter, an average of 175,000 new jobs were added per month, compared to 216,000 in the last quarter of 2022 and 397,000 in the first quarter of the same year. “The March payrolls are part of several signals that the economy is slowing,” ADP Chief Economist Nella Richardson said upon the report’s release. “Employers are pulling back after a strong year in hiring and salary growth.”
The report by ADP, which provides human resources services to private companies in the US, is used as a forecast for the official wage data of the US Department of Labor. However, there can be substantial changes between ADP’s number and the government’s official number.
On Tuesday it was announced that the number of new jobs opened was 9.93 million, while the expectation was for 10.4 million new jobs. This is the first time in a year and a half that the figure falls below 10 million.
What will the Fed do?
Today’s report will provide a final snapshot of the labor market ahead of the Fed’s next policy-making meeting on May 3. And the April figures are expected to be published only on May 5.
On March 22, the Fed raised the interest rate by 0.25% to a level of 5%-4.75% and the latest forecasts published by the central bank show that it plans only one more increase this year, probably at a rate of 0.25%. However, currently the contracts in the market are divided regarding the possibility of another interest rate increase. Investors estimate that the probability of each of the options (an increase of 0.25% or leaving the interest rate the same) is about 50%.
Oxford Economics Chief Economist Nancy Vanden Houten noted in a review on Tuesday that although today’s report is expected to show a continued slowdown in the labor market, it will likely not deter the Fed from raising interest rates by another 0.25%. “The moderation will not convince the Fed that the labor market is slowing enough to reach the 2% inflation target,” she wrote.
Meanwhile, Bloomberg’s recession probability model, which relies on 13 indicators, sees a 97% chance of a recession as early as this July, compared to 76% in the previous update – and that’s even before taking into account the effects of the banking crisis and the spike in oil prices. The probability of a recession in 12 months remains at 100%.