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U.S. job creation slows but unemployment drops to a new record low

Summary:
Job growth was strong in the first quarter as a whole, however, and latest numbers may not lead Fed to change its overall assessment of the economic outlook.Non-farm payrolls increased by 98,000 m-o-m in March, well below consensus expectations (180,000). Adverse weather conditions likely weighed on the aggregate numbers. Moreover, job creation averaged 177,000 in Q1 2017, above the Q4 average of 147,000.Importantly, the US unemployment rate fell to a new cycle low of 4.5% in March, from 4.7% in February. The U6 measure of underemployment dropped to 8.9%, from 9.2%. Wage growth was in line with expectations, up 0.2% m-o-m and 2.7% y-o-y in March.Overall, we suspect that today’s jobs report will not lead to a material reassessment of the economic outlook by the Fed. Barring a sharper slowdown in job creation or the economy, the main driver for monetary policy in the next few months is likely to be the prospects of fiscal stimulus, or lack thereof.

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Job growth was strong in the first quarter as a whole, however, and latest numbers may not lead Fed to change its overall assessment of the economic outlook.

Non-farm payrolls increased by 98,000 m-o-m in March, well below consensus expectations (180,000). Adverse weather conditions likely weighed on the aggregate numbers. Moreover, job creation averaged 177,000 in Q1 2017, above the Q4 average of 147,000.

U.S. job creation slows but unemployment drops to a new record low

Importantly, the US unemployment rate fell to a new cycle low of 4.5% in March, from 4.7% in February. The U6 measure of underemployment dropped to 8.9%, from 9.2%. Wage growth was in line with expectations, up 0.2% m-o-m and 2.7% y-o-y in March.

Overall, we suspect that today’s jobs report will not lead to a material reassessment of the economic outlook by the Fed. Barring a sharper slowdown in job creation or the economy, the main driver for monetary policy in the next few months is likely to be the prospects of fiscal stimulus, or lack thereof.

Mr. Frederik Ducrozet is a Senior Econoist at Banque Pictet & Cie SA, Research Division. Prior to this, he served as Senior Eurozone Economist at Credit Agricole Corporate and Investment Bank, Research Division from June 2006 till September 2015. He joined Crédit Agricole SA in 2005. Mr. Ducrozet contributed to the various publications of the research department, with a special focus on macroeconomic developments in Eurozone countries, including on the outlook for fiscal policy and the ECB’s monetary policy. Nadia Gharbi is economist at Pictet Wealth Management. She graduates in Université de Genève, Les Acacias, Canton of Geneva, Switzerland Do not hesitate to contact Pictet for an investment proposal. Do not hesitate to contact Pictet for an investment proposal. Please contact Zurich Office, the Geneva Office or one of 26 other offices world-wide.

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