Lending Association

US Fed eyes inflation fight

This week, the US Federal Reserve will closely scrutinize its inflation battle with the imminent release of the crucial Consumer Price Index on Tuesday and the Producer Price Index on Thursday.

Following the robust February jobs report, a substantial decline in the CPI, particularly the core reading, will need to occur before a rate cut becomes more certain.

The latest jobs report provided intriguing data: February saw the addition of 275,000 new jobs, while the unemployment rate rose from 3.7% to 3.9%.

Wage growth slowed to an annual rate of 4.3%, with only a 0.1% increase in the month, attributed partly to the temporary layoff of lower-paid outdoor workers due to severe weather conditions in January.

Despite this, the average working week extended to 34.3 hours, indicating that employers are still facing challenges in finding labor.

While Wall Street anticipated 198,000 new jobs and a 3.7% unemployment rate, the actual report presented mixed results.

On one hand, the unexpectedly high number of new jobs surpassed forecasts. On the other hand, revisions to job numbers for December and January showed a significant decrease, totaling 167,000 fewer jobs than initially reported.

Although the 3.9% unemployment rate may suggest a cooling job market, it is actually a positive sign due to more people entering the workforce in search of employment.

This rate, though the highest since early 2022, remains historically low, with a level below 4% not seen for over 50 years.

February marked the 38th consecutive month of job growth, making it the fifth-longest period of employment expansion on record. Additionally, it marked the 25th consecutive month with an unemployment rate below 4%, the longest stretch in over 50 years.

Furthermore, other labor force indicators, such as steady first-time benefit claims and moderate longer-term benefit claims, support a stable employment landscape.

Despite a decline in US job vacancies in January, the total of 8.6 million remains significantly higher than pre-pandemic levels and nearly double the figures from 2001 to 2019.