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U.S. Payrolls Surged in March, Unemployment Rate Drops – Economy Boosted by Strong Labor Market

U.S. payrolls increased by the most in nearly a year in March, and the unemployment rate fell. It showed that a strong labor market is boosting the economy.

US employment rose by 303,000 in March, the largest increase in a year – unemployment rate falling (1)

The views of market participants regarding the statistics are as follows.

◎Mr. Chris Zaccarelli of Independent Advisor Alliance (IAA):

The latest strong employment report suggests that the U.S. economy shows no signs of slowing and that consumer spending can hold up for some time. This good news is bad news for the bond market. The U.S. Fed is less likely to cut interest rates sooner and more often. The first rate cut may not occur until July. However, this could be good news for the stock market.

◎Mr. Seema Shah, Principal Asset Management:

Today’s data will reassure markets that if the Fed does not cut interest rates in June, it will be because the economy is still strong and corporate earnings should remain on the uptrend.

◎Alexandra Wilson Elizondo of Goldman Sachs Asset Management (GSAM):

Non-agricultural employment grew by more than 300,000 people, faster than expected, indicating that the labor market remains strong. However, given that average hourly wages were in line with expectations and the labor force participation rate rose slightly, there is no longer any sense of overheating.

We continue to believe that the U.S. Federal Reserve will begin reducing interest rates in an insurance manner by the end of the year in order to achieve a soft landing. This is especially true given that recent data other than employment data suggests a decline in macro momentum.

◎Bryce Doty, Senior Portfolio Manager at Sitt Investment Associates:

The release of incredibly positive employment data has sent the U.S. bond market into a state of panic as interest rates seem to be on the horizon. It baffles me why so many people are deciding to get a job now, when there have been millions of job openings for at least a few years. The economy didn’t suddenly create these jobs. Those who participate in the labor market must need the jobs. Therefore, we are cautious about how strong the employment report will be for the economy.

It is expected to cut interest rates by 25 basis points (bp, 1bp = 0.01%) in the July-September period (third quarter) and by 50bp in the October-December period.

◎George Mateo of Key Wealth:

Given the underlying strength of the U.S. economy, the U.S. Federal Reserve may need to reconsider its current stance of cutting interest rates three times this year. But there are bullish reasons driving the change. The economy is doing well and has withstood rising interest rates better than most expected.

◎Mr. Giuseppe Sette of Toggle AI:

In the short term, the latest data will fuel concerns that further inflationary pressures will prompt the Fed to raise interest rates again. But in the medium term, it is another sign of a healthy economy that shows no signs of recession. Another strong showing in non-farm payrolls puts the doves on the back foot once again. Why should the Fed cut interest rates when the job market is so strong and inflation so persistent?

◎Chris Larkin, Managing Director of E-Trade Financial, a Morgan Stanley affiliate:

The large upturn in the employment report may not have completely closed the door to a June interest rate cut, but there is a little less light shining in compared to a day ago. That’s why the Consumer Price Index (CPI) and Producer Price Index (PPI) scheduled to be released next week will become even more important. Stock markets have largely shrugged off troubling data in recent months, but if these inflation indicators beat expectations for a third straight month, the Fed could This could put a damper on the market’s confidence that the Bank will cut interest rates at this point.

◎Joe Gaffoliglio of Mutual of America Capital Management:

The US labor market has remained resilient throughout 2024, and the March employment statistics maintained this trend. The latest jobs report highlights the strength of the job market in the broader context of a U.S. economy that continues to be largely unaffected by rising interest rates.

In addition to the continued strength of the labor market, the inflation rate remains above the US Federal Reserve’s target of 2%. It is likely that a cautious stance will be maintained.

Original title:Stocks Rise as Jobs Data Show US Is Powering Ahead: Markets Wrap(excerpt)

2024-04-05 14:39:04
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