4 April 2025
If you are covering the latest US employment data, please find below a comment from CJ Cowan, portfolio manager at Quilter Investors:
“Given the events that have unfolded since President Trump's inauguration in January, it felt like there was only downside risk coming into the release of the US employment report. If it was worse than expected, that would be taken as confirmation that the weaker sentiment surveys were beginning to bleed into real economic activity; and if it was better than expected then it would be dismissed as out-of-date following Trump’s worse than expected tariff announcements on Wednesday night and China’s subsequent retaliation.
“As it happened it was a bumper print, with non-farm payrolls up 228,000 compared to estimates of 140,000, although downward revision to the past 2 months of 48,000 softens the overall jobs picture a little. The household survey showed a 0.1% increase in the unemployment rate to 4.2%. Meanwhile the change in Average Hourly Earnings were a little weaker than expected at 3.8% y/y vs consensus of 4%. So far we aren't seeing Elon Musk's efforts to slim down the government workforce having a significant effect on aggregate employment numbers.
“Ultimately none of this was particularly relevant as market participants are too focused on the implications of tariffs. And indeed, the stronger payrolls number had little immediate effect on the equity market selloff we have seen recently. What this does do, however, is make the Federal Reserve's job even harder. The resilience in the labour market reduces the room to cut interest rates in response to a negative growth shock as inflation still remains a problem, and is set to get worse.”
