New payrolls (NFP) excluding the agricultural sector in the United States significantly exceeded economists’ estimates. THE nonfarm payrolls in March they increased by 303,000 units, well above Dow Jones estimates of 200,000 units and above all above the 270,000 recorded in February. Wall Street accelerates downward following the publication of the jobs data, as the prospects for the Fed’s next moves remain increasingly uncertain.
“The reaction of the markets was clear, especially on the currency market,” he wrote in a note Philip DiodovichMarket Analyst, IG. After the release of the jobs report we observed strong buying on the dollar. The quotes of the Eurodollar currency pair fell from 1.0840 to 1.08.”
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NFP above expectations, uncertainty over Fed choices
The unemployment rate in March fell to 3.8% from the previous 3.9%, in line with expectations. While the participation rate to the workforce is rose to 62.7%with an increase of 0,2% compared to February. The measure that includes discouraged workers and those in part-time positions for economic reasons remained stable at 7,3%. The average hourly wage increased by 0.3% on the month e 4.1% compared to a year ago, both data in line with Wall Street estimates.
The US Bureau of Labor Statistics has revised the figures for recent months slightly upwards (+22 thousand jobs in total compared to previous estimates). The January figure was revised upwards by 27,000 units to +256,000 units, that of February downwards by 5,000 to 270,000 units.
“The controversies regarding the revisions of the data on the labor market are denied for the umpteenth time by the release of this data, a situation which further distances a reduction in interest rates and which positions the US economy as the strongest of the Western world, writes David Pascucci, market analyst, XTB, in a note. “Improving unemployment still puts pressure on inflation which could still remain close to 3%, a situation which the Fed is trying in every way to bring back. Only a worsening of domestic economic conditions, the infamous “hard landing” of the economy, could lead to the ideal condition of a decline in inflation and a consequent rate cut”, concludes Pascucci.
Nonfarm Payrolls USA. In March, new payrolls, excluding the agricultural sector, increased by 303,000
Following the release of the US jobs data, some analysts are predicting the first Fed rate cut, currently in the range 5.35-5.5%move towards July and no longer to June.
“The labor market figures for March showed very good numbers for the past month, a growth in new jobs not seen since May 2023.” He writes in a note Filippo Diodovich, Senior Market Analyst, IG. “Despite the dovish words of the Fed Chairman, Jerome Powell, we believe that there are many doubts within the Monetary Committee on what decision to take in the coming months”, goes on Diodovich. “The macroeconomic data show a still strong economy and a very healthy labor market. We believe that the dynamics of inflationary pressures in the coming weeks will influence the decision whether to cut the cost of borrowing as early as June. At the moment we keep the our expectations for a reduction in interest rates in the month of July.”
US employment, the performance of individual sectors
The growth in employment at a sectoral level, according to the US Bureau of Labor Statistics (BLS) report, was not too surprising. The healthcare sector contributed the most with 72.000 nnew pay slip, followed by the public sector with 71,000 units. The entertainment and hospitality sector added 49,000 units and the construction sector added 39,000. Retail contributed 18,000 new jobs while the “other services” category added 16,000.
Despite the decline in the overall unemployment level, the rate for Blacks rose to 6.4%, a gain of 0.8%, reaching its highest level since August 2022. Rates for Asians and Hispanics are both dropped sharply to 2.5% and 4.5%, respectively.