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The U.S. economy added 916,000 jobs in March and the unemployment rate fell to 6 percent in a sign that the recovery was accelerating in the month Joe Biden enacted his $ 1.9 trillion stimulus. Dollars.
Nonfarm payroll data released on Friday beat economists’ expectations and marked a sharp improvement from the upwardly revised 468,000 jobs created in February and 233,000 jobs created in January.
The improvement in the job market has come amid optimism about the United States’ fight against the pandemic, as the winter surge in infections has slowed and the vaccination rate has skyrocketed.
In recent weeks, Covid-19 cases have started to rise again, but the pace of inoculation has continued to increase, raising hope for further improvement in the coming months.
March’s job increases were not only larger than in previous months, but were also more broad-based. Hiring in the leisure and hospitality sector, which has been especially sensitive to the ups and downs of the pandemic but boosted job earnings last month, fell from a pace of 384,000 to 280,000.
But employment in goods production, including manufacturing and construction, rebounded dramatically, from 44,000 jobs lost in February to a gain of 183,000 jobs last month. Government hiring increased to 136,000 after eliminating 90,000 jobs in February.
The report weighed on short-term government bond prices, with some traders taking a stand on the prospect that a faster economic rebound could lead the US central bank to tighten policy faster than previously thought. . The yield on the two-year note, which has been anchored near zero, rose 0.03 percentage points to 0.19 percent. It was one of the largest one-day increases in the yield of the note in the past year.
Future interest rates implied on Fed fund futures and Eurodollars also rose on Friday, underscoring investors’ swings.
“It seems to be the recovery [is] happening much faster than people thought could put the Fed in a position where they might have to do something sooner rather than later, ”said Tom di Galoma, managing director of Seaport Global Holdings. “The front-end is starting to price a fit.”
The economic recovery in recent months had predominantly hit long-term US Treasury debt, pushing yields on the 10-year bond to more than 1.7 percent. But Federal Reserve officials have not voiced any alarms about rising borrowing costs or even the likely rise in inflation this year, saying it is likely to be transitory.
Long-term US government bonds, which recently performed their worst quarterly performance since 1980, fell after the data was released.
The benchmark yield on 10-year Treasuries rose 0.05 percentage points to 1.72% in morning trading in New York, not far from the 14-month high of 1.78% reached earlier this week.
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Five- and seven-year Treasuries were also under pressure. The yield on the five-year note rose just under 0.08 percentage points to 0.98 percent, while the 7-year note traded 0.06 percentage points higher at 1.42 percent.
The major stock markets globally, including US exchanges, are closed for the Easter weekend. Speaking before heading to Camp David for the holidays on Friday, Biden said the United States still has “a long way to go to get our economy back to normal,” but the improvement was evident.
“My message to the people of the United States is this: Help is here. The opportunity is coming ”.
The strength of the jobs report was amplified by the unemployment rate declining from 6.2 percent to 6 percent, as more Americans found work and more looked for work, with the American workforce expanding by 347,000 people.
“The [rebound] employment still leaves 8.4 million below its pre-pandemic peak of just over a year ago, but, given that the vaccination program is likely to reach a critical mass in the coming months and the next round of fiscal stimulus will provide a big momentum, finally there is light at the end of the tunnel, “said Paul Ashworth, chief US economist at Capital Economics.
Brian Levitt, Invesco’s global market strategist, said the report was “confirmation of what we were all starting to grasp a few months ago, which was that the economy is accelerating and the launch of the vaccine is a game changer.” .
“To that you add the fiscal support [with] a lot of money to be deployed. . . And as a result, you’re seeing companies hire to address current demand and stay ahead of future demand. “
The recovery seen in the job market has not erased the scars caused by the pandemic, and investors expect the US central bank and the White House to continue stimulating the economy as millions of Americans remain out of work.
“Today’s report confirms that labor market conditions are definitely improving, but achieving inclusive and broad-based full employment will be a multi-year process. As such, we expect the Fed to keep rates stable through mid-2023, ”said Nancy Vanden Houten, lead US economist at Oxford Economics.
“People will focus on the drop in the unemployment rate, but that number is not as relevant in terms of what the Fed is looking for,” added Gershon Distenfeld, co-head of fixed income at AllianceBernstein. “What really matters is how the economy will look when we open up. How much of the supply side has been damaged? ”
