Investing.com – The monthly US labor market report is due later on Friday, a report that could make or break the first Fed rate cut in June.
The US economy is expected to have added 212,000 jobs in March, when the report is released at 08:30 ET (12:30 GMT), lagging from the 275,000 jobs added in February.
The report is also expected to show that it has remained below 4% for 26 straight months, the longest such stretch since the late 1960s, while it is expected to have risen 0.3%, up from the previous month’s jump of 0.1%.
The Fed stuck to its view of cutting interest rates three times this year at its meeting in March, raising hopes of a cut in June, but a number of officials, including Chairman Jerome Powell, recently stressed the need for the US central bank to continue… Study more data before starting the interest rate cutting cycle.
Strong economic numbers, including surprising growth in the US index at the beginning of the week, have dampened expectations that interest rate cuts will begin as soon as June.
The head of the Federal Reserve Bank of Minneapolis added to the doubts on Thursday, noting that if inflation continues to stall, there may not be a need to cut interest rates at all this year.
With this in mind, all eyes are on the report, given that interest rate cut optimism has been the main driver of gains for most developed market stocks since late 2023.
“Investors are starting to think the Fed may delay a rate cut from June until later in the summer (or late 2024) if we get another hot jobs report,” analysts at Kinsale Trading said in a note.
Impact investment bank Goldman Sachs (NYSE:) was looking forward to such a report, calling for the jobs report to rise to 240,000 jobs.
“Our forecasts reflect continued above-normal strengthening in immigration, as new entrants to the workforce are matched with job openings,” analysts at the bank said in a note.
“Big data metrics also generally point to a strong pace of job gains, and our layoffs tracker indicates that the pace of layoffs remains low.”
Morgan Stanley (NYSE:) was also expecting something above consensus, forecasting 245,000 jobs created last month.
“The pace of payrolls has accelerated since last fall, rising to an average of 265,000 jobs per month over the past three months after a pace of 212,000 jobs per month in the fourth quarter of 2023 and 213,000 jobs in the third quarter of the year,” Morgan Stanley analysts said in a note. . “Overall, immigration flows support continued rapid growth in salaries.”
However, Citigroup (NYSE:) took a less optimistic approach, forecasting that the nonfarm payrolls report would have risen by 150K in March and “remain strong.”
“Markets may still be underestimating the possibility of softer labor market data in the second quarter of the year that would prompt the Federal Reserve to start cutting interest rates in June and continue cutting at each subsequent meeting,” analysts at the US bank said in a note. .
2024-04-05 11:43:00
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