US: Nonfarm Payrolls open the door to further tightening – UOB

Senior Economist at UOB Alvin Liew comments on the latest release of the US jobs report (Friday).

Key Takeaways

“The US exceeded expectations with 236,000 jobs added in Mar but that was still the lowest print since Dec 2020 while the jobless rate receded to 3.5% (after a brief uptick to 3.6% in Feb), as the unemployed numbers fell by 97,000 to 5.8 million and participation rate inched up to 62.5%. Wage growth continued but the pace was in line with forecast, and slower at 0.3% m/m, 4.2% y/y.”

“Wage growth staying further below 5% may give the Federal Reserve (Fed) some comfort the risk of wage-price spiral is not imminent, but the persistent tightness in some industry segments is likely to keep the Fed on track for one more hike in May.”

“We continue to assign a high probability the Fed will hike rates by another 25bps to 5.00-5.25% in 2/3 May 2023 FOMC.”