3 - 5 minute read
Despite missing estimates by 3,000 jobs, the U.S. Bureau of Labor Statistics’ (BLS) report for March showed the addition of 236,000 jobs. The numbers mark a steady gain in employment, with February’s gain of 311,000 jobs being revised higher to 326,000. The BLS also reported a drop in the unemployment rate to 3.5%, beating projections by 0.1%.
In the wake of this positive report, the short-term rate futures markets projected a two-in-three chance that the Federal Reserve will pause its more than one-year-long series of rate hikes at its upcoming May meeting.
The steady price of bitcoin (BTC) at around $27,000 immediately following the announcement suggests that the market was not surprised by the report. However, investors need to remain cautious due to the volatility of the crypto market, and consider the implications of the monthly payroll report, given its impact on interest rate decisions by the U.S. central bank.
Gains in Most Sectors; Job Growth Strong
The U.S. economy is currently boasting an impressive employment record, demonstrating gains in many sectors. The BLS report showed gains in professional and business services, healthcare, and leisure and hospitality, however, the manufacturing industry saw a loss of six thousand jobs in March. While many traders focus on the headline job number, it is worth noting the potential significance of those growing sectors.
In terms of the unemployment rate, the 0.1% drop in March marks the lowest point in nearly half a century, demonstrating the strength of the labor market. Additionally, the report showed an increase in wages of 4 cents per hour, which translates to an impressive annual growth rate of 3.2%.
John Herrmann, chief economist at Mitsubishi UFJ Securities USA, posited that the report suggests “the greatest asset of the US economy has been its job market”. The consistency of U.S. job growth is a positive sign for the economy, and should provide some reassurance to investors.
Warnings from Earlier Data Suggests Caution is Key
While the BLS report for March brought some positive news, earlier data hinted at weaknesses in the labor market. ADP’s report showed the addition of just 145,000 private sector jobs, a figure significantly lower than the projected 210,000. The Department of Labor continued this trend with weekly jobless claims surging to 228,000, well over the projected 200,000.
These warnings should serve as an indication that whilst the economy is currently seeing solid job growth, volatile swings in the labor market can occur. This highlights the importance of cautious trading and a well-diversified portfolio.
Bottom Line
The U.S. BLS report for March showed the addition of 236,000 jobs, missing estimates by just 3,000 jobs, whilst also reporting a drop in the unemployment rate by 0.1% from February. This successful monthly payroll report suggests that the U.S. economy is showing resilience, buttressing against potential economic uncertainties that could arise. While this is good news, analysts warn investors to remain cautious in their trading since data earlier this week revealed signs of weaknesses in the labor market. In light of this, investors should consider a well-diversified portfolio, regular risk assessments and personal trading strategies.
