The March employment report delivered a surprise boost to the U.S. economy, with job creation far outpacing Wall Street predictions and unemployment declining to 4.3%, reinforcing expectations that Federal Reserve officials will maintain their current interest rate policy while monitoring economic conditions, inflation trends, and geopolitical tensions involving Iran.
Employment growth reached 178,000 positions last month according to Friday’s data release. Previous months saw significant revisions, with February’s job losses adjusted to 133,000 from the initially reported 92,000 decline, while January’s employment gains were updated to 160,000 from 126,000. Financial analysts surveyed by Reuters had predicted only 60,000 new jobs for March. The jobless rate improved from February’s 4.4% figure, surpassing the anticipated 4.4% consensus forecast.
MARKET RESPONSE:
EQUITIES: Stock trading was suspended for the Good Friday holiday.
DEBT MARKETS: Treasury bond yields climbed following the employment data release. The benchmark 10-year note yield increased by 4 basis points to reach 4.35%.
CURRENCY: The dollar index gained 0.06 points to 100.08.
EXPERT ANALYSIS:
STEVE SOSNICK, CHIEF STRATEGIST AT INTERACTIVE BROKERS, NEW CANAAN, CONNECTICUT:
“For the time being we can put the narrative to bed about the labor market going into retrograde. The headline number blew away expectations. The one month revision was substantial but the two month revision is quite small. It’s hard to say this is anything but a solid report.
“If you’re hoping for cuts, this report does nothing to improve your hopes.”
MARK LUSCHINI, CHIEF INVESTMENT STRATEGIST AT JANNEY MONTGOMERY SCOTT, PITTSBURGH:
“This is kind of a mixed reading but overall solid enough to allow the Fed to stay on the sidelines. Revisions took some of the thunder out of the headline number, and wage growth is slowing, indicative of perhaps some slack in labor markets. But mostly the point is unemployment isn’t surging, which is a good sign for the economy.”
ZACHARY GRIFFITHS, HEAD OF INVESTMENT-GRADE CREDIT, CREDITSIGHTS, CHARLOTTE, NORTH CAROLINA:
“The market reaction has been tempered a little bit. We did have further downward revisions. You have February at negative 133,000 so there’s clearly a lot of volatility on this data, a lot of revisions, commonly that are then revised again with the annual look back. So it’s tough to take a signal from the data over the past couple months on net.”
“As for Fed policy based on this data, the threshold for any policy adjustments by the Fed is very high right now. I think they’re probably in wait-and-see mode particularly now that we got this headline payrolls beat of more than 170,000, which is certainly well above what the Fed has been talking about in terms of a breakeven rate with respect to the unemployment level. So we do think that the threshold to hike is higher than the threshold to cut, but we think policy is likely on hold for the foreseeable future, and today’s report certainly reinforces that view.”
JUAN PEREZ, DIRECTOR OF TRADING, MONEX USA, WASHINGTON:
“Not so strong…looking at the prior month’s revision, it looks like we lost more than the original Feb reading of 92K…we feel the dollar’s moves today and Monday will be naturally limited because of the observance of the Easter holiday, particularly in key regions like European nations and Latin America.
“The petro-dollar effect, which has been the main catalyst of the U.S. dollar resurgence recently, is fading as optimism grows that energy problems will be alleviated. There’s not a ton of clarity in a world where uncertainty reigns, but labor is overshadowed by the effects of armed conflict and hopes over its resolution.”
