03 November 2023
If you are covering the latest employment data from the US, please find below a comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“Following a slew of robust and strong data prints, the US economy is finally showing signs that cracks are appearing in what has been a formidable façade. While the number of payrolls dropping was expected, the fact it missed expectations quite significantly can’t be ignored by the Federal Reserve and will give it serious thought for its next interest rate decision.
“The market is on tenterhooks for signs that the hiking cycle is over, and following a pause earlier this week, this latest data may just confirm that 5.25%-5.5% is the limit the Fed is happy to go to. Clearly, Jerome Powell is keen to stress that we are in a higher interest rate period for longer, but with the effects of the hikes to date still to fully take effect, its job at achieving a ‘soft landing’ is far from over. It will be mindful that it does not want to tip the economy into recession, all the while ensuring we do not get another bout of inflation.
“Despite this reading, the US economy remains incredibly robust and in a strong position, especially when compared to peers. However, the jobs market is going to be watched closely for signs that the US consumer and corporate America is in trouble. For now, things are okay, but further weakening of the labour market may just start to turn that perception more negative.”
