Even as the U.S. stock markets remain closed today on account of Good Friday, investors were keeping a close watch on the jobs report released today. This week, the market has been volatile as the weekly jobless claims data on Thursday came in hotter than expected pointing towards a slowing job growth market.
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A CNBC report cited data from outplacement firm Challenger, Gray & Christmas to point out that planned layoffs were 89,703 in March, up by 15% from February. Year-to-date, job cuts have jumped 396% year-over-year to 270,416.
Considering this scenario, the latest jobs report indicated that the U.S. economy added 236,000 jobs in March versus economists’ expectations of the addition of 240,000 jobs, and a further slowdown from the addition of 311,000 jobs in February. This total was the lowest monthly gain since December 2020.
The unemployment rate held steady at 3.5%, versus economists’ estimates of 3.6%. The average hourly earnings were up by 0.3% in March to $33.18 from an increase of 0.2% in February and in line with consensus estimates. However, the annual rate of an increase in wage growth slowed down to 4.2% from 4.6% in February, lower than economists’ estimates of 4.3%. The rise in wage growth is still higher than the around 3.5% that economists believe would be more consistent with the Fed’s inflation target rate of 2%.
Over the first calendar quarter, investors had cheered signs of an overheated economy cooling down and believed that it could result in the Federal Reserve pausing its hikes in interest rates. However, the recent jobless claims data has left investors wondering if, in a bid to cool down inflation, the Fed has gone too far when it comes to monetary tightening and plunged the economy into recession.
This slowdown indicates that the Fed likely has more work to do to cool the labor market further. Fed Chairman Jerome Powell had stated earlier that the economy needs to create only about 100,000 jobs every month to keep up with population growth.
