Tag: federal reserve

US employers added 236,000 jobs in March, unemployment at 3.5%

US hiring slowed in March – but the jobs market remains historically tight in a trend that could put pressure on the embattled Federal Reserve to proceed with another interest rate hike.

Nonfarm payrolls increased by 236,000 last month, according to the Labor Department’s closely-watched March jobs report released Friday.

The figure was roughly in line with expectations. Prior to the March jobs report’s release, economists polled by Dow Jones had forecast jobs growth of 238,000.

The US unemployment rate sank slightly to just 3.5%, down from 3.6% in February.

“Employment continued to trend up in leisure and hospitality, government, professional and business services, and health care,” the Bureau of Labor Statistics said in a release.

Average hourly wages ticked 0.3% higher, slightly more than economists expected. Wages have increased by just 4.2% over the last 12 months – the slowest clip since mid-2021.

Elsewhere, hiring in February was revised upward to show the US economy added 326,000 jobs that much – 15,000 more than what was previously reported.

Investors anxiously awaited the latest hiring data given lingering uncertainty about the Fed’s policy path. Fed Chair Jerome Powell has often cited tightness in the jobs market as the central bank enacted a series of rate hikes over the last year.


Hiring in March matched expectations.
AP

“The labor market is cooling down though not as quickly as the Fed would like it to,” Derek Tang, an economist at LH Meyer/Monetary Policy Analytics in Washington, told Bloomberg. “This keeps a May hike in play, though just barely.”


Jobs report
Wages increased by 0.3% in March.
AP

The market is pricing in a 69% probability that the Fed will implement another quarter percentage point interest rate hike at its next policy meeting on May 2-3, according to CME Group’s FedWatch tool. Investors see just a 31% chance that the Fed will pause its tightening campaign.

The Fed implemented a quarter-point hike last month, signaling its resolve to tame inflation despite weakness in the US banking sector. Inflation is still running abnormally high – with prices jumping 6% year-over-year in February, according to last month’s Consumer Price Index.

Powell and other experts have suggested that bank crisis could lead to tightened credit conditions that would further cool prices.


The US unemployment rate is just 3.5%.
AP

US stock futures were mixed as the market digested the March jobs report. Dow Jones Industrial Average futures fell about 55 points, while Nasdaq and S&P 500 futures were flat.

Hiring stayed resilient even as major US companies slashed jobs and enacted cost-cutting measures amid signs of a slowing economy.

Disney began its first of three planned rounds of layoffs in late March as part of plans to cut about 7,000 jobs and $5.5 billion in expenses.

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Consumer prices — a key inflation gauge — hotter than expected in August

A key inflation indicator showed higher-than-expected increases in core prices in August, adding more pressure on the Federal Reserve to act despite the risk of a deeper recession.

Consumer prices increased by 6.2% in August compared to the same month one year ago, according to the Commerce Department’s Personal Consumption Expenditures index — the Fed’s preferred measure of inflation. The annual rate was down from 6.4% in July.

Prices rose by 0.3% compared to the previous month.

The core PCE, which excludes volatile food and energy prices, increased by a hotter-than-expected 4.9% year-over-year in August, or by 0.6% compared to July.

Ahead of the release, economists expected core PCE inflation to increase by 4.7% year-over-year and by 0.5% compared to July.

The PCE inflation gauge is one of many data points the Federal Reserve uses to inform its policy path. Earlier this month, the Fed hiked its benchmark interest rate by three-quarters of a percentage point for the third consecutive time as it doubled down on the fight against inflation.

The Fed’s hawkish stance has spooked investors who fear the central bank’s rate hikes will tip the US economy into a deep recession. Meanwhile, the Fed has pledged to adjust its path based on the data it receives.

“The [Federal Open Markets Committee] is strongly resolved to bring inflation down to 2% and we will keep at it until the job is done,” Fed Chair Jerome Powell said at a press conference earlier this month.

Ex-Treasury Secretary Larry Summers warned this week that the level of global market risk is similar to conditions seen prior to the Great Recession – and pointed to inflation-related discomfort as a key obstacle for policymakers.

The Fed is expected to enact more rate hikes this year.
AFP via Getty Images

Chicago Fed President Charles Evans, a non-voting member of the rate-setting FOMC, said he was “a little nervous” the Fed was hiking rates too rapidly to fully assess the impact on markets.

Another closely watched gauge, the Consumer Price Index, showed earlier this month that inflation ran at a hotter-than-expected 8.3% in August. Core CPI inflation, which excludes volatile food and gas prices, rose 6.3% year-over-year — up sharply from the rate of 5.9% seen in June and July.

Market analysts are increasingly fearful of a global recession.
Getty Images

As The Post reported, inflation has increased 13% since President Biden took office. Critics of the Biden administration argue the president’s government spending programs and restrictive energy policies have helped to fuel inflation.

Meanwhile, Biden and his allies have argued inflation is showing signs of improvement – and largely placed the blame for higher prices on aftershocks related to the COVID-19 pandemic as well as Russian President Vladimir Putin’s invasion of Ukraine.

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Fed’s future rate hikes hinge on inflation data: minutes

Federal Reserve officials said last month that the pace of future interest rate increases would hinge on incoming data, with some saying rates would need to stay at a “sufficiently restrictive level” for “some time” in order to control inflation, according to the minutes of the July 26-27 session.

Participants at the session said it may take longer than anticipated for inflation to dissipate, and that a slowdown in aggregate demand engineered by the central bank “would play an important role in reducing inflation pressures,” said the minutes, which were released on Wednesday.

The Fed hiked interest rates by another 0.75% last month.
Bloomberg via Getty Images

The minutes did not indicate clear bias among Fed officials for either a smaller rate increase of half a percentage point or a third consecutive 75-basis-point hike at the upcoming Sept. 20-21 meeting, but a restatement that the behavior of inflation and the economy in general would drive the decision.

The Fed has lifted its benchmark overnight interest rate by 225 points this year to a target range of 2.25% to 2.50% as part of an effort to control inflation, which is running at a four-decade high and hovering, by the Fed’s preferred measure, at more than three times the 2% target.

The central bank is widely expected to hike rates next month by either 50 or 75 basis points.

For the Fed to scale back its rate hikes, inflation reports due to be released before the next meeting would likely need to confirm that the pace of price increases was declining.

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