2024-04-06 08:16:32
The rate of job growth in the United States in March once again greatly exceeded expert expectations. Accordingly, the possibility of an early interest rate cut has further decreased. Some are arguing that the interest rate should actually be raised.
On the 5th (local time), the U.S. Department of Labor announced in its pre-opening employment report that non-agricultural jobs increased by 303,000 last month compared to the previous month.
This number significantly exceeds the 200,000 cases predicted by experts compiled by the Wall Street Journal (WSJ). This is also higher than the February figure of 270,000, which was revised by the Ministry of Labor.
The unemployment rate was 3.8%, down 0.1 percentage points from the previous month and consistent with expert forecasts.
Average hourly wages, which directly affect inflation, rose 0.3% compared to the previous month and 4.1% compared to the previous year. This also met market expectations.
The U.S. labor market remains strong despite high interest rates.
Accordingly, the possibility of an early interest rate cut has further decreased. This is because the U.S. economy is still hot and there is no reason to cut interest rates.
The day before, Minneapolis Fed President Neel Kashkari warned that “inflation is still sticky” and that “an interest rate cut within the year may not occur.”
As he warned, the Federal Reserve’s early interest rate cut seems to be going by the wayside.
Regarding the employment report, the New York Times said, “This continued strength meets the Federal Reserve’s expectations that the U.S. economy has reached a healthy balance where steady commercial activity, employment growth, and wage growth coexist.”
Bloomberg News also pointed out, “This figure suggests that the Federal Reserve can be patient in lowering interest rates,” adding, “The Federal Reserve has bought time.”
“This data calls into question the bearish outlook for the economy,” said Thomas Simmons, economist at U.S. asset management firm Jefferies. “At present, it is difficult for the Federal Reserve to argue that interest rates should be lowered, and rather discussions on raising interest rates should become more active than they are now,” he pointed out.
Meanwhile, despite the possibility of an interest rate cut being greatly reduced, the U.S. stock market rallied on this day. Dow rose 0.80%, S&P 500 rose 1.11%, and Nasdaq rose 1.24%.
The employment report has two aspects. First of all, a solid labor market is bad news for the stock market because it further lowers the possibility of an interest rate cut by the Federal Reserve, the U.S. central bank.
However, a solid job market is also good news for the stock market because the U.S. economy is booming and corporate performance will improve. On this day, American investors gave meaning to the latter.
The capital market also appears to be giving up expectations of an early interest rate cut.
(Seoul = News 1)
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2024-04-06 08:16:32