US employment Hiring surge pushes US jobless rate to 49-year low Trump administration figures renew push for rate cut from the Fed
Pan Kwan Yuk in New York MAY 3, 2019
A hiring surge by US employers drove the unemployment rate to a 49-year low in April, but the strong numbers failed to quell pressure from the Trump administration for Federal Reserve interest rate cuts.
Non-farm payrolls rose 263,000, according to the labour department, comfortably above Wall Street forecasts of a gain of 190,000. Average hourly wages were up 3.2 per cent year-on-year, unchanged from the previous month when expectations were for a slight increase.
The unemployment rate fell from 3.8 per cent to 3.6 per cent — the lowest since December 1969. The drop resulted in part from the departure of nearly 500,000 people from the labour force.
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The strength of the US labour market has eased fears of an economic slowdown which, earlier this year, some bond market indicators had suggested could be coming soon. Last week's blowout GDP report, showing 3.2 per cent annualised growth, also suggested the economy is holding up better than expected.
Equity markets have bounced back following the violent sell-off seen at the end of 2018, with both the S&P 500 and the Nasdaq Composite setting new highs this week. They rose on Friday after the release of the latest jobs report.
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"JOBS, JOBS, JOBS!" President Donald Trump tweeted after the release of the data.
For the Fed, the lack of an uptick in wage growth in April should strengthen its resolve to keep interest rates on hold for the time being. On Wednesday, Fed chairman Jay Powell disappointed some investors by saying there was no immediate need to move interest rates higher or lower, in defiance of repeated calls from Mr Trump for the central bank to loosen monetary policy.
Mr Trump has positioned himself to blame Mr Powell and the Fed for any economic slowdown that might happen in the run-up to his re-election bid in 2020, and senior administration figures on Friday again called for a rate cut.
"There's no inflation; the economy is roaring," vice-president Mike Pence said in an interview with CNBC. "This is exactly the time, not only to not raise interest rates, but we ought to consider cutting them."
White House economic adviser Larry Kudlow said he believed the Fed was in fact considering a rate cut. "With these low inflation numbers, I think the Fed is actually looking at rate cuts," Mr Kudlow told Fox Business. "Our views right now intellectually are not really far apart from the Federal Reserve, best I can determine."
James Knightley, chief international economist at ING, argued that Friday's job report should put to bed the notion that the Fed will cut interest rates any time soon.
"This is an incredibly strong outcome and suggests US corporates aren't experiencing the downturn priced in by the bond market," he said. "With wage growth picking up and firms increasingly using benefits packages to retain and incentivise staff, we suspect that the market is underplaying the inflationary pressures coming from the labour market."
Mr Powell said on Wednesday that inflation below the Fed's 2 per cent target may be "transitory". The central bank's favoured measure of inflation was running at 1.6 per cent in March, the most recent data available.
Treasury yields initially edged higher on Friday before retreating. By lunchtime in New York, the yield on the benchmark 10-year Treasury was 2 basis points lower at 2.5 per cent.
The jobs report included revisions to previous months' data. Employers added 189,000 jobs in March and 56,000 jobs in February, a net upward revision of 16,000. After
https://www.ft.com/content/7ba8b150-6d90-11e9-80c7-60ee53e6681d 05/05/19, 15=47 Pagina 3 di 4
revisions, job gains have averaged 169,000 a month over the past three months, compared with the average gain of 223,000 jobs a month in 2018.
Hiring in professional services, construction and healthcare accounted for just over half of April's job gains. Employment in manufacturing and mining were little changed, while the retail sector shed 12,000 positions last month.
A hiring surge by US employers drove the unemployment rate to a 49-year low in April, but the strong numbers failed to quell pressure from the Trump administration for Federal Reserve interest rate cuts.
Non-farm payrolls rose 263,000, according to the labour department, comfortably above Wall Street forecasts of a gain of 190,000. Average hourly wages were up 3.2 per cent year-on-year, unchanged from the previous month when expectations were for a slight increase.
The unemployment rate fell from 3.8 per cent to 3.6 per cent — the lowest since December 1969. The drop resulted in part from the departure of nearly 500,000 people from the labour force.
https://www.ft.com/content/7ba8b150-6d90-11e9-80c7-60ee53e6681d 05/05/19, 15=47 Pagina 1 di 4
The strength of the US labour market has eased fears of an economic slowdown which, earlier this year, some bond market indicators had suggested could be coming soon. Last week's blowout GDP report, showing 3.2 per cent annualised growth, also suggested the economy is holding up better than expected.
Equity markets have bounced back following the violent sell-off seen at the end of 2018, with both the S&P 500 and the Nasdaq Composite setting new highs this week. They rose on Friday after the release of the latest jobs report.
https://www.ft.com/content/7ba8b150-6d90-11e9-80c7-60ee53e6681d 05/05/19, 15=47 Pagina 2 di 4
"JOBS, JOBS, JOBS!" President Donald Trump tweeted after the release of the data.
For the Fed, the lack of an uptick in wage growth in April should strengthen its resolve to keep interest rates on hold for the time being. On Wednesday, Fed chairman Jay Powell disappointed some investors by saying there was no immediate need to move interest rates higher or lower, in defiance of repeated calls from Mr Trump for the central bank to loosen monetary policy.
Mr Trump has positioned himself to blame Mr Powell and the Fed for any economic slowdown that might happen in the run-up to his re-election bid in 2020, and senior administration figures on Friday again called for a rate cut.
"There's no inflation; the economy is roaring," vice-president Mike Pence said in an interview with CNBC. "This is exactly the time, not only to not raise interest rates, but we ought to consider cutting them."
White House economic adviser Larry Kudlow said he believed the Fed was in fact considering a rate cut. "With these low inflation numbers, I think the Fed is actually looking at rate cuts," Mr Kudlow told Fox Business. "Our views right now intellectually are not really far apart from the Federal Reserve, best I can determine."
James Knightley, chief international economist at ING, argued that Friday's job report should put to bed the notion that the Fed will cut interest rates any time soon.
"This is an incredibly strong outcome and suggests US corporates aren't experiencing the downturn priced in by the bond market," he said. "With wage growth picking up and firms increasingly using benefits packages to retain and incentivise staff, we suspect that the market is underplaying the inflationary pressures coming from the labour market."
Mr Powell said on Wednesday that inflation below the Fed's 2 per cent target may be "transitory". The central bank's favoured measure of inflation was running at 1.6 per cent in March, the most recent data available.
Treasury yields initially edged higher on Friday before retreating. By lunchtime in New York, the yield on the benchmark 10-year Treasury was 2 basis points lower at 2.5 per cent.
The jobs report included revisions to previous months' data. Employers added 189,000 jobs in March and 56,000 jobs in February, a net upward revision of 16,000. After
https://www.ft.com/content/7ba8b150-6d90-11e9-80c7-60ee53e6681d 05/05/19, 15=47 Pagina 3 di 4
revisions, job gains have averaged 169,000 a month over the past three months, compared with the average gain of 223,000 jobs a month in 2018.
Hiring in professional services, construction and healthcare accounted for just over half of April's job gains. Employment in manufacturing and mining were little changed, while the retail sector shed 12,000 positions last month.
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