April 7, 2023
Still away this week. Back on Aprfil 23. But could not resist a fast look at the employment report for March.
Payroll employment increased by 236 thousand which was about as advertised. But the nonfarm workweek fell 0.1 hour to 34.4 hours. The workweek has been bouncing between 34.4 and 34.5 hours for the past several months. In short, it appears the labor market is softening ever so slowly. Having said that, the unemployment rate fell 0.1% to 3.5% and remains far below the so-called full employment level of 4.0%. The Fed would love for it to climb above the 4.0% mark to 4.5% or so to reduce upward pressure on wages. Not likely to happen any time in the next several months.
We have been looking for about 2.0% GDP growth in the first quarter and 1.0% in the second quarter. Those growth rates seem about right for now.
Nothing in this report will prevent the Fed from raising the funds rate another 0.25% in May. Beyond that we will see. Depends upon whether the economy continues to slow and, most importantly, whether the inflation rate falls quickly. We still think the peak rate will be about 6.0%.
Enjoy the weekend.