Mixed unemployment report

Yesterday’s U.S. jobs report showed a surprisingly strong rebound in payroll job growth, with nonfarm payrolls rising by 178,000. The report delivered a positive surprise after February’s weakness (which included strike activity, weather, and other factors). The unemployment rate edged down to 4.3% from 4.4% (below the expected 4.4%). The number of unemployed people was roughly 7.2 million. Job growth beat expectations by a wide margin, suggesting the labor market has some underlying resilience. Sector gains in health care, construction, and services point to continued demand in essential and cyclical areas. That said, the data is mixed and not overwhelmingly strong. The three-month average remains subdued, revisions shaved net prior-month gains, the household survey showed employment declining, and the labor-force drop (61.9%) raises questions about discouragement or people exiting, rather than new jobs pulling people in. Wage growth is steady but not hot, and hours worked slipped slightly. Broader context includes earlier softness in job openings and a cooling trend from the post-pandemic boom. Not a clear signal for the Fed or the markets, which are now obsessed with the conflict in Iran and the oil repercussions on global order. There is not enough information on the labor market to determine the fate of rates.

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