Fed Counts On Job Growth To Fight High Inflation

The US Federal Reserve officials are counting on US Job growth as an aid to fight against high inflation. The key employment and data will be released on Friday, today April 7, 2023. It would be the last data release before their rate decision in May, next month, as per Reuters report in Economic times.

Several economists anticipate, that from the Fed's perspective, the data released for March will be a middling result, as the month was marred by the largest bank failures since the 2007-2009 financial crisis, events that for a brief time at least shifted policymakers' main focus from inflation to financial stability.

While the worst-case financial woes for the financial sector seem appear, its avoided for now, the Feds are refocusing on the real economy, including employment and wage growth seen likely to remain above what is considered consistent with the Fed's 2% inflation target

There are several details that are pointing to a deepening sense among businesses that the economy is slowing and consumer demand weakening are expected tepid growth in manufacturing jobs and fewer industries adding jobs at all. Also there are developments that could help ease the pace of price increases.

But the headline numbers could be less comforting to the US central Banks. As per a Reuters poll, economists expect a gain of 239,000 jobs in March, with hourly wages rising at a 4.3% annual rate and the unemployment rate remaining at 3.6%, a level seen less than 20% of the time since World War Two.

However in comparison of payroll for the decade during pre Covid-19 averaged out about 180,000 per month. The wage growth remained close to the 2%-3% range seen by Fed policymakers as consistent with their goal of a 2% annual increase in the Personal Consumption Expenditures price index.

The PCE price index rose by 5% annually as for February, or 4.6% when volatile food and energy prices were excluded. It was dubbed as too high for the Fed's liking and with improvement coming only slowly in recent months.

The Labor Department on Thursday unveiled revisions to its measure of jobless benefits, it was showing that more than 100,000 additional people have recently been receiving unemployment assistance than previously estimated.

The Labor Department is due to release the report at 8:30 a.m. EDT (1230 GMT).