The US non-agricultural data for March will be released this Friday. If this data exceeds expectations, then the probability that the Fed will cut interest rates in the first half of the year is expected to continue to decline, which will have a major impact on major global assets.
The US Bureau of Labor Statistics (Bureau of Labor Statistics) will release the much-publicized employment report on Friday. The report is expected to show an increase of 200,000 jobs. This would be down from 275,000 in February, but stable by historical standards — the five-year average before the pandemic was 191,000.
Since December 2020, jobs in the US have been increasing every month, and March may be the 39th consecutive month of job growth.
Forecasters also expect the unemployment rate to fall from 3.9% to 3.8%, not far from the 50-year low of 3.4% set in April last year, as layoffs are still relatively few.
If these predictions hold true, it will further prove that the US economy has shown resilience under the heavy pressure of the Federal Reserve's high interest rates. To curb inflation, the Federal Reserve kept borrowing costs for all types of loans at the highest level in decades.
BMO Capital Markets senior economist Sal Guatieri wrote in a review article: “Instead of slowing down, the US labor market seems to be picking up again.”
Financial market trends may depend on the impact of employment data on the prospects for the Federal Reserve to cut interest rates later this year. The Federal Reserve has kept the benchmark interest rate at its highest level since 2001. Officials say they are watching economic data to decide when to cut interest rates.
According to the Chicago Mercantile Exchange Group (CME Group) FedWatch tool, as of Monday afternoon, the financial market expects a 58% chance that the Federal Reserve will start cutting interest rates at the June meeting.
An unusually hot labor market could disrupt these expectations — Federal Reserve officials have long feared that rapid wage growth could push the inflation rate higher than the 2% annualized target set by the Federal Reserve. On the other hand, the unexpected weakness in the job market may prompt the Federal Reserve to cut interest rates faster and earlier to help stimulate businesses and avoid a recession.
Economists at BMO Capital Markets say that even if the employment report is close to expectations, it may not have much impact on the economy.
Data from earlier this week showed a slight increase in job vacancies in the US in February as the number of recruiters increased, reflecting further signs of elasticity in the US labor market.
According to new data released by the US Bureau of Labor Statistics on Tuesday, there were 8.76 million vacancies at the end of February, a slight increase from 8.75 million in January. January job vacancies were downgraded. Job vacancy and labor mobility surveys also showed that 5.8 million new employees were hired in February, a slight increase from 5.7 million in January.
The recruitment rate rose slightly to 3.7% in February, up from 3.6% in January.
Nancy Van Den Howton, chief US economist at the Oxford Institute of Economics, said: “The February job vacancy and labor mobility survey report is consistent with the fact that the labor market is still quite healthy.”
edit/emily