US labour market cooling, but still hot – ABN Amro

Economists at ABN Amro noted in their latest client note that the” US Payrolls growth slowed to 236k in March, down from 326k in February, and continuing the broad cooling trend in the labour market of the past year or so.”

Additional quotes

“The unemployment rate declined one tenth, to 3.5% – close to its all-time low. Wage growth remained benign at 0.3% m/m (4.2% y/y), though we must add the caveat here that productivity has been very weak of late, meaning that unit labour cost growth has surged (meaning that the labour market still poses upside risks to inflation). The overall message is that the labour market is loosening, but remains exceptionally tight. “

“Although markets reacted strongly to the steep drop in the JOLTS job vacancies on Wednesday, we interpret this data with caution given that similarly large declines in the past were subsequently revised away. The tendency for the JOLTS data to be revised may reflect that the survey response rate has fallen to a very low level of c.30% (i.e. the data is likely not as reliable as it used to be).”

“A more gradual slowing in the labour market is visible in other data, including continuing jobless claims, and challenger job cut announcements (both of which have been rising but remain historically low).”