The labour market rebounded in March suggesting the lacklustre performance in February could be more of a temporary blip than a slowdown. The economy added 196K jobs in March from 33K in February while the unemployment rate remained unchanged for the second straight month at 3.8% in March. Meanwhile, the participation rate eased slightly to 63.0% while wage growth continued to grow above 3% for eight consecutive months, up 3.2% y/y in March.

Under normal circumstances, such figures open the door for the Fed to think about hiking rates again. But despite the tight labour market and growth in average hourly earnings, inflation pressure remains unalarming. The jobs data confirms that US growth is slowing, but it is far from collapsing. And these numbers should keep the market pleasant — keeping the Fed firmly on hold while providing reassurance that there is no sign of the impending recession heralded by the recent inversion of the yield curve. So, the Fed can continue with its holding pattern on monetary policy, reducing another recession indicator due to over tightening

• The labour market rebounded in March suggesting the lacklustre performance in February could be more of a temporary blip than a slowdown. The economy added 196K jobs in March from 33K in February (consensus: 180K). The unemployment rate remained unchanged for the second straight month at 3.8% in March, while the participation rate eased slightly to 63.0% from 63.2% in February. Meanwhile, wage growth continued to grow above 3% for eight consecutive months, up 3.2% y/y from 3.4% y/y in February.

• The cooler wage growth in March should keep the US Fed at its patient mood even as hiring turned out to be stronger than expected. We believe the that the “lost momentum” in hiring could be due to more of a lack of available labour to fill positions than weaker demand for workers. Still, the jobs gain is being partially overshadowed by slower growth in wages, which should reinforce the Fed’s plans to put its interest rate rises on hold in 2019.

• Under normal circumstances, such figures open the door for the Fed to think about hiking rates again. But despite the tight labour market and growth in average hourly earnings, inflation pressure remains unalarming.

• The jobs data confirms that US growth is slowing, but it is far from collapsing. And these numbers should keep the market pleasant — keeping the Fed firmly on hold while providing reassurance that there is no sign of the impending recession heralded by the recent inversion of the yield curve. So, the Fed can continue with its holding pattern on monetary policy, reducing another recession indicator due to over tightening.

Source: AmInvest Research - 8 Apr 2019