The US economy continues to create jobs at a rate surpassing expectations. Employment increased by 303,000 in March, compared to 270,000 previously, with expectations at 200,000. Over the past decade, the monthly average growth has been 170,000, with monthly increases of 190,000 to 200,000 associated with a healthy growth in an economy that is not overheating. In other words, the job market is creating opportunities at a pace that is too rapid.
FxPro's senior analyst, Alex Kuptsikevich, notes that surprisingly, wage growth has not accelerated at the same time. The average hourly earnings in March increased by 4.1% compared to the same period last year, marking the lowest level since mid-2021.
From the standpoint of financial market risks, this is a perfect report. We see strong employment growth, which means that household spending is likely to rebound. However, wage growth is slowing, removing the possibility of inflation spiraling out of control again.
In the coming weeks, the market is likely to price in a slight decrease in interest rates, one or two times before the end of the year, rather than the currently predicted three times. There might be a reassessment of the likelihood of a rate cut from the current 58% to 10-20% by June 12, which is moderately positive for the dollar and unlikely to have a dramatic impact on the stock market.
