The United States economy continued to add jobs quickly leading to a decrease in the unemployment rate to 3.5 percent in March 3.6 percent.
According to Reuters, this suggests a tight labor market that could lead to the Federal Reserve increasing interest rates again in May.
The Labor Department’s closely watched employment report on Friday showed an increase of 236,000 nonfarm payrolls in March, and February data was revised upward to 326,000 jobs added.
A slowdown in hiring was partially due to the waning impact of the mild weather in January and February.
Economists polled by Reuters predicted payroll growth to be 239,000, with estimates ranging from 150,000 to 342,000.
Meanwhile, the US economy needs to create around 100,000 jobs per month to keep up with the growth in the working-age population.
In the recent economic data, the employment report did not yet reflect the financial market stress triggered by the failure of two regional banks in March, consistent with recent economic data.
According to the reports, “The unemployment rate fell to 3.5% from 3.6% in February. Average hourly earnings rose 0.3% in March after gaining 0.2% in February.
“That lowered the annual increase in wages to 4.2% from 4.6% in February, which was still too high to be consistent with the Fed’s 2% inflation target.
“Fed officials will now await inflation data later this month to gauge the impact of their year-long monetary policy tightening campaign.”
CME Group’s FedWatch tool revealed that “Financial markets were leaning toward the U.S. central bank increasing rates by another 25 basis points at the May 2-3 policy meeting.”
AmBusiness reported in March that the Federal Reserve raised its benchmark overnight interest rate by a quarter of a percentage point last month, but signaled a pause in further rate hikes in response to financial market stress.
