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US Job Growth Blows Past Expectations

In the United States, employers hired many more workers last month than initially expected and continued to steadily raise salaries.

US Job Growth Blows Past Expectations

The mentioned indicators indicate that for the US economic system, the first quarter of the current year was a period of stability and sustainability. So far, there is no definitive understanding of how the situation in the sphere of employment will affect the monetary policy of the Federal Reserve System in the context of the issue of cutting interest rates.

The report of the United States Department of Labor, published on Friday, April 5, indicates that in March the unemployment rate in the country was 3.8%. It is worth mentioning that in February the corresponding figure was recorded at 3.9%. The decrease in the unemployment rate has formed a kind of impact effect on the sharp recovery in household employment, which gained 469,000 people who have become part of the labor force.

Currently, the economic system of the United States is one of the strongest on a global level. It is also important that the corresponding state of affairs has been formed, even though the Fed, as part of measures to counteract the inflationary process, has raised interest rates by 525 basis points since March 2022. According to economists, most businesses locked in lowering the cost of borrowing before the monetary tightening cycle of the central bank of the United States. In this case, some protection was provided against the financial consequences of a consistent increase in interest rates. Also, the mentioned businesses were able to retain their workforce.

Over the past year, the United States labor market has benefited from increased immigration.

Eric Merlis, managing director and co-head of global markets at Citizens Bank, says that the US economic system has probably adapted to the new normal, which is high-interest rates. Also, according to the expert, the data published on Friday by the Department of Labor does not increase the urgency of the Fed’s decision on lowering the cost of borrowing.

In March, the number of nonfarm payrolls in the United States increased by 303,000 jobs. This was reported by the Bureau of Labor Statistics of the specified department.

A significant increase in employment in March was recorded in the healthcare sector. It’s known that 72,000 jobs were added in ambulatory services, hospitals, residential care, and nursing facilities last month.

In the government sector, the number of jobs increased by 71,000 in March. In this case, the main factor that formed the final result was the hiring of employees by local and federal authorities.

Also, 39,000 jobs were added in the construction sector last month. This figure is about twice the average monthly increase of 19,000 observed over the past 12 months. It is worth noting that traditionally the construction sector is one of the most susceptible segments of the economic system to the level of interest rates. This sphere of activity belongs to the category of the main beneficiaries of softening financial conditions.

The number of people employed in the leisure and hospitality sector increased by 49,000 last month. In this sphere of activity, the employment rate has returned to the level observed before the coronavirus pandemic.

Besides, last month, the employment situation improved in the sectors of social assistance, retail, and wholesale trade. At the same time, no new jobs were added in the manufacturing industry.

The average hourly earnings increased by 0.3% in March after rising by 0.2% in February. The annual wage increase last month was 4.1%. It is worth noting that in February the corresponding indicator grew by 4.3%. It is worth noting that a wage increase in the range from 3% to 3.5% is considered by experts as corresponding to the Fed’s inflation target of 2%.

The average workweek in March was 34.4 hours. In February, this figure was 34.3 hours.

Against the background of data released on Friday by the Department of Labor, financial markets moderated their expectations for lower interest rates in the United States in June. Currently, market participants believe that the probability of such a decision by the central bank in the mentioned month is approximately 50%.

Fed Chair Jerome Powell this week repeated many times stated thesis that the financial regulator does not intend to rush into the issue of lowering the cost of borrowing. Last month, the central bank left the policy rate unchanged in the range of 5.25%-5.50%.

As we have reported earlier, US Manufacturing Sector Demonstrates Growth.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.