The Fed may decide to keep raising interest rates as a result of the positive job statistics.
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It is possible that the Federal Reserve will raise interest rates once more next month as a result of the US economy's sustained rapid job creation in March, which helped to lower the unemployment rate to 3.5 percent.
According to the carefully anticipated employment report released on Friday by the Department of Labor, nonfarm payrolls climbed by 236,000 jobs in the previous month. Data for February was updated to reflect 326,000 employment additions in February rather than the formerly reported 311,000.
A portion of the slowdown in hiring was due to the exceptionally warm weather in January and February losing some of its impacts.
Reuters polled economists, who projected a 239,000 increase in payrolls. There were between 150,000 and 342,000 estimates. For the economy to keep up with the rise in the working-age population, over 100,000 new jobs must be created each month.
It was too soon for the financial market stress brought on by the failure of two regional banks in March to manifest itself in the employment report, as it was with the majority of recent economic data.
From 3.6 percent in February, the jobless rate decreased to 3.5 percent. After increasing by 0.2 percent in February, the average hourly wage increased by 0.3 percent in March. As a result, the annual increase in salaries dropped from 4.6 percent in February to 4.2 percent, but it was still too high to be compatible with the Federal Reserve's aim of 2 percent inflation. Now, Fed officials will wait for inflation data later this month to assess the success of their year-long effort to tighten monetary policy.
According to CME Group's FedWatch tool, financial markets were leaning toward the US central bank raising rates by an additional 25 basis points at the May 2-3 policy meeting.
In response to the stress on the financial markets, the Fed increased its benchmark overnight interest rate by a quarter of a percentage point last month but also signaled that it was considering delaying future rate increases. Since last March, it has increased its policy rate by 475 basis points, moving it from near zero to the current range of 4.75 percent to 5.00 percent.
However, the job market is becoming less attractive. The weekly claims and continuing claims data from the Department of Labor underwent major improvements in the yearly revisions that were released on Thursday.
This week, surveys from the Institute for Supply Management provided a pessimistic analysis of the labor situation. According to government statistics, there were 1.7 job vacancies for every unemployed individual in February, the lowest level of job openings in nearly two years.
Beginning in the second quarter, the labor market is anticipated to significantly loosen as businesses adjust further to the decreasing demand brought on by increasing borrowing prices.
Additionally, credit restrictions have tightened, which may make it more difficult for consumers and small enterprises to obtain financing. Since the pandemic's end, small companies like bars and restaurants have been the primary contributors to job development.
Some experts believe that payrolls will decline in the second half of the year, which will force the Fed to start lowering interest rates in order to prevent the economy from entering a severe recession. Jerome Powell, the chair of the Fed, has pushed back against this notion.
According to economists who predicted a rate decrease this year, the economy is already in some sectors, including the property market, and credit availability will become more constrained as a result of banks adopting stricter lending requirements.
They also observed that consumer confidence remained low while the corporate mood was at recessionary levels. (Reporting by Lucia Mutikani; Editing by Paul Simao and Chizu Nomiyama)
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