FOMC remains on track for 2015 rate rise despite that the US economy appears to have tripped over itself

US Economic Update – 06 April 2015

The headline for last week was that, on good Friday, the US non farm payrolls number tanked for the month of March. This was as the economy added just 126,000 new jobs during the month, which is a number that pales into insignificance when compared with the +264,000 of the previous month and the 3 month rolling average of +288,000.

However, on a more positive note, average earnings growth picked up notably during the same month, rising from 0.1% to 0.3% on a month on month basis. This is positive for both the US economy as well as for interest rate hawks. Although with this aside, recent data along with consensus expectations suggest that the pace of growth in the US probably slowed during the first quarter.

The slowdown appears to be the result of a stronger US dollar as well as the impact upon output of another harsh winter. The preliminary estimate for US GDP in Q1 will be released later on this month.

Despite slower growth and last week’s payrolls numbers, market expectations remain that the Federal Reserve will still raise rates some time between June and September.

This is given the lagged effect of changes in monetary policy, the strong jobs growth of the last 12 months as a whole, along with the fact that wages are now beginning to show consistent signs of a recovery.

Looking ahead the key event for the US economy in the coming week will the release of the minutes for the most recent FOMC meeting, although the importance of these is also reduced given the fact that there was a press conference immediately after the last meeting.

Dow Jones / 10 Minute Intervals

Tweet

Follow @stockatonia

IMPORTANT:
The contents of this report and the Stockatonia website (https://www.stockatonia.co.uk/) have been prepared to provide general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Please always remember that the value of investments may fall as well as rise. Investing in securities, and any other products associated with them, carries a high degree of risk and may not be suitable for all investors. For advice or guidance related to investing in securities markets, please consult with your own financial adviser.

[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]