PARIS (Reuters) – The U.S. economy created more jobs than expected in March, while wage growth accelerated, the Labor Department’s monthly report showed on Friday.
The data suggests the economy ended the first quarter on solid footing, which could shift the timing of the expected interest rate cut this year.
The report lists 303,000 non-agricultural jobs created last month in the United States, compared to 270,000 (revised from 275,000) in February, while economists polled by Reuters forecast an average of only 200,000.
The unemployment rate fell to 3.8% in March, compared to 3.9% the previous month. The Reuters consensus was 3.9%.
The increase in average hourly wages accelerated, to 0.3% in March, after +0.2% in February, against a consensus of +0.3%. On an annual basis, its progression reached 4.1% after +4.3% the previous month and a consensus of 4.1%.
After the publication of this statistic, on Wall Street, futures contracts on the main indices reduced their gains, now suggesting an opening up 0.20% for the Dow Jones, 0.31% for the Standard & Poor’s 500 and 0.36% for the Nasdaq, the day after a session in sharp decline.
The yield on ten-year Treasury bills stands at 4.3895%, up almost eight basis points.
The dollar strengthened, by 0.29%, against a basket of international currencies.
These new data showing a still vigorous economy are published while the American Federal Reserve (Fed) has been working since March 2022 to curb demand to bring down inflation.
The “fed funds” rate has thus increased by 525 basis points since this date to reach 5.25%-5.50%. This particularly high level of interest rates has made it possible to attenuate inflationary pressures without precipitating the economy into recession, to the point that the markets are now doubting the Fed’s projections of a reduction in its key rates to three repeated this year.
According to the CME Group’s Fedwatch barometer, traders now expect a probability of only 54.5% on a first rate cut by the Fed in June, compared to more than 70% last week.
Economists say most businesses benefited from low borrowing costs before the Fed’s monetary tightening cycle, which protected them from rising rates and allowed them to retain workers.
On the household side, the balance sheet is also generally good, which helps to support consumer spending. The labor market has also benefited from an increase in immigration over the past year.
(Written by Claude Chendjou, with contributions from Lucia Mutikani, edited by Sophie Louet)
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