NEW YORK, April 3 (Reuters) - U.S. nonfarm payrolls expanded more than Wall Street anticipated last month and the jobless rate fell to 4.3%, bolstering expectations that the Federal Reserve will hold interest rates steady as it gauges economic growth, inflation and the impact of the war with Iran.
Nonfarm payrolls rose by 178,000 in March, data showed on Friday. February’s decline in jobs was revised to 133,000 from 92,000, while January’s gain was revised to 160,000 from 126,000. Economists polled by Reuters had forecast March payrolls advancing by 60,000 jobs.The unemployment rate declined from 4.4% a month ago and beat the 4.4% Reuters consensus.
MARKET REACTION:
STOCKS: U.S. stock markets were closed for Good Friday.
BONDS: U.S. Treasury yields rose after the payrolls report. The yield on benchmark U.S. 10-year notes rose 4 basis points to 4.35%.
FOREX: The dollar index rose 0.06 to 100.08.
COMMENTS:
JASON PRIDE, CHIEF OF INVESTMENT STRATEGY AND RESEARCH AT GLENMEDE, PHILADELPHIA:
“Our read on this report was on the surface, a lot better than February – decent bounceback in payrolls, nice directional move in unemployment. But underneath that there was a little bit of noise that we saw was primarily in the jostling around of the labor force, it was a little bit of a weird movement of those numbers.
“The number of unemployed persons fell by 332k, which is the largest single-month drop since November 2021. However, it appears that rather than finding jobs, many were either discouraged or had become marginally attached to the labor force, meaning they were available and willing to work but had not actively sought a job within the last month. This will be an important development to monitor in the months ahead.”
STEVE SOSNICK, CHIEF STRATEGIST AT INTERACTIVE BROKERS, NEW CANAAN, CONNECTICUT:
“For the time being we can put the narrative to bed about the labor market going into retrograde. The headline number blew away expectations. The one month revision was substantial but the two month revision is quite small. It’s hard to say this is anything but a solid report.
“If you’re hoping for cuts, this report does nothing to improve your hopes.”
STEPHEN BROWN, CHIEF NORTH AMERICA ECONOMIST, CAPITAL ECONOMICS, LONDON:
“We got a big headline number, but mostly coming from healthcare. Also the report benefited from a shift in mostly unfavorable weather effects in previous months to more favorable ones.
“The Fed has been saying we are in a good place to see how the energy shock plays out. It’s encouraging to see the labor market pick up a little momentum.
“We are keeping an eye on the fall in information employment, categories like computer system design. The question for later this year is whether this will progress to cuts in other sectors.”
MARK LUSCHINI, CHIEF INVESTMENT STRATEGIST AT JANNEY MONTGOMERY SCOTT, PITTSBURGH:
“This is kind of a mixed reading but overall solid enough to allow the Fed to stay on the sidelines. Revisions took some of the thunder out of the headline number, and wage growth is slowing, indicative of perhaps some slack in labor markets. But mostly the point is unemployment isn’t surging, which is a good sign for the economy.”
ZACHARY GRIFFITHS, HEAD OF INVESTMENT-GRADE CREDIT, CREDITSIGHTS, CHARLOTTE, NORTH CAROLINA:
“The market reaction has been tempered a little bit. We did have further downward revisions. You have February at negative 133,000 so there’s clearly a lot of volatility on this data, a lot of revisions, commonly that are then revised again with the annual look back. So it’s tough to take a signal from the data over the past couple months on net.”
“As for Fed policy based on this data, the threshold for any policy adjustments by the Fed is very high right now. I think they’re probably in wait-and-see mode particularly now that we got this headline payrolls beat of more than 170,000, which is certainly well above what the Fed has been talking about in terms of a breakeven rate with respect to the unemployment level. So we do think that the threshold to hike is higher than the threshold to cut, but we think policy is likely on hold for the foreseeable future, and today’s report certainly reinforces that view.”
JUAN PEREZ, DIRECTOR OF TRADING, MONEX USA, WASHINGTON:
“Not so strong…looking at the prior month’s revision, it looks like we lost more than the original Feb reading of 92K…we feel the dollar’s moves today and Monday will be naturally limited because of the observance of the Easter holiday, particularly in key regions like European nations and Latin America.
“The petro-dollar effect, which has been the main catalyst of the U.S. dollar resurgence recently, is fading as optimism grows that energy problems will be alleviated. There’s not a ton of clarity in a world where uncertainty reigns, but labor is overshadowed by the effects of armed conflict and hopes over its resolution.”
JERRY TEMPELMAN, VICE PRESIDENT OF ECONOMIC AND FIXED INCOME RESEARCH AT MUTUAL OF AMERICA CAPITAL MANAGEMENT, NEW YORK:
“The markets are looking to the March jobs report to demonstrate stability, following the unexpected loss of 92,000 jobs in February. Today’s addition of 178,000 jobs helps, and the unemployment rate changing slightly at 4.3% is not yet a cause for immediate concern. However, the “low-hire, low-fire” slowdown cannot be ignored. Regardless of last month’s surprising result, the Federal Reserve’s decision to maintain current interest rates – particularly given an uptick in inflation to 4.4% – was widely anticipated. This outcome reflects ongoing caution as policymakers balance the short-term disruptions that are acutely felt across the economy, with longer-term economic stability.”
