West News Wire: After a frenzied January, US job growth certainly slowed down last month, but the unemployment rate likely kept steady at a 53-year low, showing that the labor market has mostly resisted the Federal Reserve’s significant interest-rate increases.
In February, payrolls climbed by 215,000, as predicted by the median respondent in a Bloomberg survey. Results that shattered hopes for a short-term halt in the Fed’s tightening drive included the US firms adding more than 500,000 people and the unemployment rate dropping to 3.4% at the beginning of the year.
The final jobs report before the Fed meets March 21–22 to decide whether to raise rates by another 25 basis points or, in light of recent data suggesting stubborn inflation, to act more forcefully, will be released on Friday. Officials will also have February consumer-price index and retail-sales data in hand before they meet.
“If the data show that the re-acceleration at the start of the year was short-lived, the Fed’s narrative would become much easier,” Bank of America Corp. economists, led by Michael Gapen, said in a report. “A little bad news would be good news for the Fed.”
Resilient labor demand has bolstered wage growth, in turn undergirding consumer spending and adding to employers’ costs. That risks keeping inflation higher for longer, and helps explain why swaps markets are now pricing in a peak policy rate of 5.5% in September. The benchmark rate currently stands in a range of 4.5% to 4.75%.
Elsewhere, Canada’s central bank may halt rate hikes while Australia’s will likely increase again, and the Bank of Japan’s decision will mark the end of an era.