Washington, DC, USA: U.S. added 103000 jobs in March, falling short of economists and market consensus expectation of 193000 jobs according to a government report released today, Friday. The average hourly earnings figure rose 0.3 percent, against estimates of 0.2 percent. The number equates to 2.7 percent on an annualized basis. The average work week was unchanged at 34.5 hours. Economists expected the unemployment rate to decline one-tenth of a point to 4 percent. In addition to total non-farm payroll employment increase of 103000 in March, the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics also reported.
Federal Reserve policymakers watch the jobs number closely. The central bank is widely expected to hike its benchmark interest rate in June and at least once more before the end of the year. The Fed is keeping an especially close eye on wages for signs of inflation.
The report comes amid a series of mixed signals for the economy.
Coming into today’s NFP, several indicators had positive leads. The ISM manufacturing employment index was better than expected at 573. albeit down from 59-7 – seasonal factors playing its part. The ADP employment numbers, at 241000 were also higher than median forecasts, while ISM non manufacturing employment was higher In Mar at 56.6 vs 55.0.
Focus was expected to be on earnings growth as usual, and as Long as growth remains inside the 0.1-0.3% range, there will be Little concern abot the Fed for now. There is also the possibility that the unemployment rate drops below the 40% mark
EUR/USD to Stay Under Pressure on Upbeat Non-Farm Payrolls (NFP) Report
And a U.S. Non-Farm Payrolls (NFP) accompanied by signs of faster wage growth would have encouraged the Federal Open Market Committee (FOMC) to implement higher borrowing-costs over the coming months.
A further improvement in labor market dynamics would also have encouraged the FOMC to deliver four rate-hikes for 2018.
However, this months lackluster jobs report will likely produce headwinds for the greenback as it drags on interest-rate expectations, with the dollar at risk for a rebound as it preserves the March range. Nevertheless, the jobs report still reflected a healthy economy overall. March was the 90th consecutive month of job gains, extending the longest streak on record.
The other factor that weighed on markets in the lead up to today’s jobs report was the China tariffs and the possibility of an escalation. President Trump said Thursday he is considering hitting China with tariffs on $100 billion more of its goods, for a total of $150 billion. Responding to Trump’s first round of proposed tariffs, Chinese officials earlier this week announced they would apply tariffs on $50 billion of US exports to China. Any escalation in the trade war rhetoric would be more negative for China than the U.S. given the former’s relative dependency on trade, but for now, the markets are focused on the payrolls data.
Government bond yields edged lower after the report’s release, while stock market futures continued to point to a lower open but were off their lows.