5 March 2024
If you are covering the latest US jobs data, please see the following comment from Lindsay James, investment strategist at Quilter Investors:
“US non-farm payrolls increased by 303,000 jobs in March, well ahead of expectations and above February’s marginally revised result of 270,000. Meanwhile, hourly earnings are projected to have risen by 4.1% compared to the same period last year. Earlier signs of a softening labour market, marked by a modest rise in unemployment and subdued wage growth, have been contradicted by recent data. This suggests that job creation and wage increases are maintaining their momentum and confounding expectations of an economic slowdown.
“Tuesday’s ADP Employment report, which offers a focused view of the labour market, also highlighted an economy that was seeing job creation gaining momentum. This surge is attributed not only to the enduring strength of the service sector but also to a revival in cyclical industries like construction and manufacturing. However, substantial earlier revisions to past payrolls data, such as the 124,000 reduction in January’s figures, revised up today by 27,000, have introduced a layer of uncertainty, complicating the central bank’s data-dependent decision-making process.
“Post-pandemic trends reveal a persistent imbalance between labour supply and demand, with approximately 1.4 jobs available for every unemployed individual—a decrease from the first half of 2022’s peak of 2.0, yet relatively unchanged over the past seven months. The labour market’s tightness, evident since early 2018 with more job vacancies than job seekers, hints at structural issues like skill shortages. While increased immigration has somewhat mitigated these shortages and curbed wage inflation, the politicisation of this issue poses a risk of intensifying the problem in the months leading up to the election.
“The Federal Reserve’s commitment to its dual mandate—achieving full employment and maintaining price stability—means that any further tightening of the labour market could reinforce other positive economic indicators, potentially delaying anticipated rate cuts.”
