US set to hike rates despite jobs slowdown
US interest rates will rise next month despite slower job growth in the world’s largest economy
- In March, 236,000 jobs were added, compared to 326,000 jobs in February
- The number was well below the 472,000 jobs added in January
- But data showed that the US labor market was still robust
US interest rates will rise next month despite slower job growth in the world’s largest economy.
About 236,000 jobs were added in March, according to the U.S. Bureau of Labor Statistics, slightly short of forecasts of 239,000 and less than the 326,000 jobs added in February.
The number was also well below the 472,000 jobs added in January, as higher borrowing costs and bleak economic prospects weighed on many companies’ hiring plans.
But the numbers showed that the US labor market is still robust, meaning the Federal Reserve is unlikely to hold back from considering another rate hike next month in its fight to curb inflation.
The data also seemed to allay fears that the US economy was on the verge of sliding into recession, with yields on 10-year US government debt rising on the news.
Fighting inflation: The jobs data showed that the US labor market is still robust, meaning the Federal Reserve was unlikely to consider another rate hike
Meanwhile, the dollar initially appreciated against the pound before settling again around 80.5 pence.
The data also showed that the US unemployment rate fell to 3.5 percent over the month, going against forecasts to hold steady at 3.6 percent. The average hourly wage meanwhile rose by 0.3 percent, a slight acceleration compared to the previous level of 0.2 percent.
Andrew Hunter, deputy chief US economist at Capital Economics, said the sharp drop in job growth over the past three months showed that momentum was “now ebbing again” and he expected the decline to continue. Equity markets in the UK and US were closed yesterday for Good Friday, meaning the real reaction will probably not be felt until Monday when Wall Street reopens.
The Federal Reserve raised interest rates another quarter of a percentage point last month to a range of 4.75 percent to 5 percent, but said it could pause further hikes to avoid additional stress on the markets.
There are fears that too sharp a rate hike could push the economy into recession, as tighter credit conditions make it more difficult for businesses and households to borrow.
Hunter said the data ended up being “a mixed bag” for the Fed and that even if the central bank raised rates again in May, they were still expected to “fall again later this year as the economy slips into recession.” ends up’.