Attention will be focused mainly on the NFP report, but in addition, the market will receive data on inflation in the euro zone and a package of PMI data for Europe and China, as well as ISM results for the US. The Monetary Policy Council will again decide on interest rates – however, we should not expect any changes here, even though CPI inflation fell in March to 1.9% and was within the NBP’s target for the first time in over three years.
The market wants to know if the US labor market is still cooling down. Therefore, the monthly NFP report will be assessed, but the JOLTS survey (indicating labor demand and employee turnover) and the private ADP will also be taken into account. The market will therefore be positioning itself ahead of Friday’s publication.
Let us recall that in February 275,000 new jobs were created, significantly more than expected and more than is needed to provide jobs for the growing working-age population (about 100,000). However, the figure itself does not show the whole picture of the labor market. It is worth noting that the increase in the previous two months was revised down by a total of 167,000. Additionally, the good February result was due to the mild weather, which increased employment. The data also shows that for some time now, a fairly large share of new jobs has been in the government sector.
The March result will probably be quite solid. Forecasts point to a result of 215,000. If we see such a result, it will indicate that the US economy is far from recession. On the other hand, a worse result than February’s will indicate that the labor market is losing momentum and the strong economic growth in the second half of 2023 is unlikely to be repeated.
Łukasz Zembik, Oanda TMS Brokers
