This Friday the US Non-farm payrolls and unemployment rate go out - what a strong report will do to expectations about rates?
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US non-farm payrolls (Mar) – 07/04 – the last US payrolls report saw yet another set of strong numbers with February jobs seeing a gain of 311k, while January was revised lower to 504k.
The bigger question here is what a strong report will do to expectations around future rate rises
The rise in the unemployment rate to 3.6% from 3.4% was treated as a slight negative, but it also coincided with a rise in the participation rate to 62.5%, which was the highest level since March 2020, and thus suggests that more US workers are returning to the workforce. We also saw a larger than expected increase in average hourly earnings to an annualised 4.6%, once again indicating some upward pressure in wages. With weekly jobless claims still averaging below 200k per week, and vacancies well above 10.8m it is quite apparent that despite recent concerns about the US economy, the jobs market remains resilient, despite recent high-profile announcements of job losses. The ADP employment numbers have also been shown to be solid rising to 242k in February, after slowing to 106k in January. As we look to this week's US non-farm payrolls numbers, expectations are for another 221k, with the unemployment rate set to remain steady at 3.6%, and wages set to increase 0.3% month on month. The bigger question here is what a strong report will do to expectations around future rate rises. Recent events have seen markets look at the prospect of a Fed pause due to concerns about financial stability.
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