NEW YORK (Reuters) - The U.S. economy continued to churn out jobs at a brisk pace in March, pushing the unemployment rate down to 3.5%, signs of persistent labor market tightness that could see the Federal Reserve hiking interest rates again next month.
Nonfarm payrolls increased by 236,000 jobs last month, the Labor Department said on Friday. Data for February was revised higher to show 326,000 jobs were added instead of 311,000 as previously reported. Economists polled by Reuters had forecast payrolls rising 239,000. Some of the slowdown in hiring reflected the fading boost from unseasonably mild weather in January and February.
MARKET REACTION:
STOCKS: S&P e-mini futures turned slightly higher and were last up 0.1%
BONDS: The yield on 10-year Treasury note rose and was last up 6.7 basis points from the close at 3.357%; The two-year U.S. Treasury yield was up 11 basis points from Thursday at 3.931%.
FOREX: The euro extended 0.26% lower against the dollar, while the dollar index extended to 0.26% firmer
COMMENTS:
BRIAN JACOBSEN, SENIOR INVESTMENT STRATEGIST, ALLSPRING GLOBAL INVESTMENTS, MENOMONEE FALLS, WISCONSIN
“While the headline number of payrolls is still elevated, hours are being cut with the index of aggregate weekly hours falling two months in a row. The employment situation has gone from red hot to merely smoldering.”
ALEX COFFEY, SENIOR TRADING STRATEGIST, TD AMERITRADE, CHICAGO
“Obviously, the headline number is basically exactly the estimate, there is really just nothing here that wasn’t where consensus was, so we have a situation where the labor market is slowly getting a little bit worse, we are seeing a little bit of indications of an economic slowdown, but we are not driving off the cliff just yet. So possible ammunition or reason for the Federal Reserve to be able to let their food off the gas pedal if they can kind of work us there and inflation data doesn’t surprise, but also not so much here in either direction that is forcing their hand either way. We sort of have a situation where this doesn’t change the game, it allows us to continue on to the next data point and that lack of surprise is seen as optimism.”
RUSSELL PRICE, CHIEF ECONOMIST, AMERIPRISE FINANCIAL SERVICES INC, TROY, MICHIGAN
“It’s in line practically everywhere. Layoff announcements are still modest relative to history, but the pace of job growth continues to slow as demand for labor is being affected by a more cautious business outlook."
“The bright spot is again the average hourly earnings. They came in a little bit below expectations for year-over-year growth at 4.2% versus the expected 4.3%, and that was down from last month’s 4.6%. So that is further encouraging for the Fed that wage inflation is easing, and thus may be taking some pressure off their need to increase rates further. "
“Labor force participation also ticked up by a tenth. That’s also encouraging news in that more potential workers are coming back to the labor force. That also should ease pressure in the job market and help overall growth in the months and quarters ahead."
“The overall headline view is that everything is remarkably in line with expectations. It’s hard to pick anything out to be notable. The job market is still tight, in general it’s still a bright spot in the economy.”
MICHAEL BROWN, MARKET ANALYST, TRADERX, LONDON
"This lunchtime's U.S. labor market data was broadly in line with expectations, and supportive of the view that the jobs market remains remarkably solid, despite continued Fed tightening & financial stability concerns."
"The Fed will look positively on a further rise in participation to a new cycle high 62.6%, while a renewed drop in unemployment to 3.5%, coupled with continued healthy headline jobs growth, should cement the case for another 25 bps rate hike at the May meeting."
"The market reaction has been choppy, but ultimately in line with what one would expect from another 'goldilocks' report, with softness seen in Treasuries, and the dollar marginally firmer; though the typical caveats around awful holiday liquidity must apply."
KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CORPAY, TORONTO
"With the American jobs juggernaut seemingly maintaining its almost-unstoppable momentum, Federal Reserve officials are likely to continue delivering their higher-for-longer message in the run-up to the May policy meeting, supporting expectations for a final rate hike and putting a floor under the dollar. That said, recent data would suggest that the economic risk backdrop is turning more negative - if inflation and retail sales numbers disappoint in coming weeks, all bets are off."
(Compliled by the global Finance & Markets Breaking News team)