A solid employment report for March.
Jobs Friday is usually the “highlight” of economic data for the week (indeed, for the month), but with everything going on with tariffs, it seems almost beside the point. Especially as it looks back at the month before the implementation of broad-based tariffs. But it is important to know how the economy was doing before the shock of tariffs. And the news was pretty good.
Nonfarm payrolls increased by 228,000 for March, above estimates of around 150,000 (although there were downward revisions of nearly 50,000 for the prior two months, so the news wasn’t quite as good). This pace of job growth remains above trend. The U-3 unemployment rate edged higher to a still low 4.2 percent – boosted in part by a small rise in the labor force participation rate to 62.5 percent (a positive). Household employment moved higher by 201,000 for the month. Average hourly earnings rose by 0.3 percent as expected (although only barely, at 0.251 percent), slowing the 12-month trend rate to 3.8 percent.
Payroll gains were broad based, although temporary help services (often viewed as a leading indicator) edged lower again. Federal government employment edged lower by 4,000 – but many of the layoffs in that sector occurred in the second half of March and so were not picked up in the survey. Next month we should expect a much larger drop in federal government employment.
The March employment report indicates underlying strength in the labor market before the hits coming from federal government layoffs and the imposition of significant tariffs – and this positive momentum may persist for a while. Even so, financial markets now expect significant easing by the Fed starting as early as June, with a 69 percent probability of the federal funds rate dropping to a range of 2.50-3.00 percent from its current rate of 4.25 percent by year end. This significant easing would likely only occur if economic growth slowed dangerously (probably in a recession), even with the likelihood of higher inflation from tariffs.
David W. Berson, Ph.D., CBE
Chief US Economist
Email | Bio
Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.
Sign up for our FREE Cumberland Market Commentaries
Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.
