10 March 2023
If you are covering the latest US employment data, please find below a comment from CJ Cowan, portfolio manager at Quilter Investors:
“Despite the jobs market continuing to beat expectations by adding 311,000 jobs, investors shouldn’t read too much into what this means the Federal Reserve will do with interest rates. With Jerome Powell’s recent comments that the data may require a larger rise in interest rates than previously expected, today’s jobs report is somewhat of a mixed bag.
“The labour market remains hot, but the initial market reaction appears to have been to focus on weaker than expected average hourly earnings growth. This is a particularly opaque measure of wage growth as it suffers from the effects of the changing composition of the labour force, but in any case the market moved to reduce the chance of a 50bp hike at the next Fed meeting. It is also worth noting the context that this print has arrived following a broad based ‘risk-off’ move in with worries around Silicon Valley Bank and whether it has any readthrough to the wider banking sector.
“Ultimately, we remain in limbo and the inflation data next week is going to give us more clues as to the Fed’s next step. Inflation is proving stickier than expected on the way back down and any indication that its pace of deceleration continues to slow could trigger a step back up in the pace of interest rate moves. With contrasting data coming through, volatility will remain present and it is important to take a longer term view to avoid being whipsawed by daily moves.”
