Fresh figures from the job report “Nonfarm payrolls” show that a surprising number of jobs were created in the US. Chief strategist calls the report strong.
The figures for April shows that 253,000 new jobs were created outside agriculture in the United States. Unemployment falls to 3.4 percent against the expected 3.6 percent.
In advance, the economists expected that 185,000 new jobs would be created. In March, 236,000 jobs were created. Unemployment stood at 3.5 per cent at the same time.
– This was a strong report with lower unemployment and higher wage growth, says chief strategist at Danske Bank, Anders Johansen.
In the recent jobs report, the March figures are revised down to 165,000 new jobs.
– It is significant and more than usual, but it goes up and down a bit, he says.
“Nonfarm payrolls” shows how many jobs were created in the US outside of agriculture, and gives a good indication of the activity in the US economy – which is why it is often called “the most important figure of the month”.
In the last ten months, job growth has been stronger than expected. Americans are waiting for signs that sharp interest rate hikes and inflation (price growth) will bite the job figures.
Disagree about interest rate hikes
– I would like to think that interest rates will rise quite a bit because of that. This is a sign that the labor market is still relatively strong, says Johansen to E24.
Despite the strong job figures, Johansen still does not think the Fed will raise interest rates further.
– I think they are done with interest rate increases in the US. I rather believe in a longer period with unchanged interest rates, and that they will keep the policy rate at five percent for several months, says the chief strategist.
Knut A. Magnussen in DNB Markets writes on his side in an update that the figures could contribute to another interest rate hike in the US. He points out that unemployment fell surprisingly to 3.4 per cent.
– This supports our forecast that an increase of a further 0.25 percentage points from the Fed in June is possible, writes the senior economist.
– Extremely tight labor market
On Wednesday this week, the Fed raised interest rates by 0.25 percentage points to a range of 5.0-5.25 percent. This happens after the central bank’s favorite target (PCE) for price growth in the US moderated to 4.2 percent in March
Core PCE inflation, which excludes food and energy prices, moderated as expected to 4.6 percent.
Unemployment is part of the puzzle that the US central bank (Fed) is watching when central bank chief Jerome Powell sets interest rates in an attempt to bring down the high inflation (price rise).
– The labor market is still extremely tight, Powell said during the interest rate meeting.