Bumper jobs report cools hopes of early US rate cuts

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Another stellar US jobs report, following last week’s higher than expected inflation figures, has further damped down expectations of early interest rate cuts in the world’s largest economy. 

American employers added 303,000 jobs in March, much higher than the 200,000 expected by economists, while the unemployment rate dipped to a lower than anticipated 3.8 per cent. Growth was particularly strong in healthcare, leisure and hospitality, and construction, as well as in government jobs.

Bond yields rose on the news as investors dialled down their bets on how many rate cuts the Federal Reserve might make this year and when that process might begin.

Fed chair Jay Powell emphasised on Wednesday that the central bank’s fight against inflation was “not done” and that more proof was needed that price pressures were easing before rate cuts could be considered, a view echoed by other policymakers. A rise in oil prices from tensions in the Middle East is also fuelling investor expectations, in Europe as well as in the US, that rates are likely to stay higher-for-longer.

The employment figures provide a much-needed boost to President Joe Biden who has put his record on jobs at the heart of his bid for re-election in November. 

“Today’s report marks a milestone in America’s comeback,” the president said, touting the more than 15mn jobs created since he took office. “That’s 15mn more people who have the dignity and respect that comes with a pay cheque.”

The problem for Biden, the FT editorial board reminds us, is that American voters still seem to put more faith in his rival Donald Trump to handle the economy. Strong headline economic numbers such as today’s jobs figures mask large differences in the lived experiences of households and businesses across the country, it argues.

“Dig beneath the surface and the country’s economic weaknesses — and its political divides — become clearer,” the FT concludes. “For a nation the size of a continent, with vast inequalities, aggregate data is obscuring. As markets place bets on the US economy and politicians campaign, it pays to break it down.”

Need to know: UK and Europe economy

UK train passengers face more disruption as train drivers launch new strikes. These charts help explain the state of the country’s railways after a long period of quiet renationalisation.

Railways in the rest of Europe have problems of a different kind: they’re being targeted by Russian hackers.

Wage growth expectations in UK businesses have hit a near-two-year low, according to a Bank of England poll, easing pressure on policymakers as they gear up for the “final mile” of their battle against inflation.

Trade groups hit out at UK plans to charge fees of up to £145 for plant and animal products imported from the EU. In true Brexit style, writes Peter Foster, the charges come at the eleventh hour, after five delays and a flip-flop over whether they’d be needed at all. Politicians however are still running scared from discussing the impact of Brexit on the British economy, the subject of the latest FT film.

Police in Italy and several other European countries arrested 22 people and seized assets worth €600mn in connection with alleged fraud involving the EU’s post-pandemic recovery fund.

House prices across the EU fell for the first time for a decade last year, as strong growth in eastern and southern countries was offset by declines in northern states. In the UK, prices fell in March, ending a five-month stretch of consecutive increases, according to lender Halifax, although separate data suggests the London property market is rebounding.

Need to know: global economy

US treasury secretary Janet Yellen warned that Washington would not allow a glut of Chinese production to wipe out American manufacturers of green technology.

The global supply of equities is shrinking at the fastest rate in decades as economic and political uncertainties lead to fewer new share sales and more corporate buybacks. The boss of one of the City’s biggest independent investment banks sounded the alarm over London’s markets, saying they will end up “dead” on current trends.

Amid painstaking international negotiations on the text of the world’s first pandemic treaty, our Big Read explains why an agreement has been so hard to reach.

Zimbabwe launched a new currency backed by the country’s gold reserves in the latest attempt to tackle decades of monetary chaos and the collapse of the Zimbabwe dollar.

Japan has been celebrating the end of a 20-year deflationary cycle but still faces serious demographic problems. The Rachman Review podcast discusses whether the country is at a turning point.

Need to know: business

Samsung Electronics, the world’s largest maker of memory chips, is expecting a 10-fold jump in first-quarter operating profit as prices recover from last year’s severe downturn.

Google is considering charging for new “premium” features powered by generative artificial intelligence, marking the first time the company has put any of its core products behind a paywall.

Commodity trading profits hit a record $104bn last year, according to a McKinsey report, even as markets calmed and earnings at some of the biggest groups fell. The war in Ukraine has pushed up prices and supercharged profits while returns have also risen from power trading.

The five-centuries old Royal Mail is on a modernisation drive as the UK’s former postal monopoly invests in robotic procedures to fend off rivals such as DPD, Evri, DHL and UPS.

Don’t forget though, that robots have rights too. A German court has ruled that even fully automated stores must obey the constitutional principle of Sonntagsruhe or Sunday rest.

Science round-up

Member states of Cern, the European Organisation for Nuclear Research, are discussing a historic expansion proposal: building a factory to produce and study the Higgs boson — the so-called god particle that gives mass to planets, stars and life.

Novo Nordisk, Eli Lilly and others are racing to develop the next generation of weight loss drugs. In the meantime, scientists continue to uncover spin-off effects: trials show Sanofi’s lixisenatide appears to slow the impact of Parkinson’s disease.

New research suggests global deaths from prostate disease will almost double in 20 years. Scientists says countries need to overhaul testing to focus more on vulnerable groups.

A fall in vaccination rates among expectant mothers has led to a resurgence in whooping cough in England. FT contributing editor Adam Tooze bemoans governments’ lack of investment in vaccines, an area with an unbeatable cost-benefit ratio.

Our Big Read details how Africa, a net importer of food, could one day help feed the world’s growing population.

Could snakes become the next superfood? Anjana Ahuja explains how their recently discovered high-speed evolutionary process has herpetologists in a tizzy.

Man-made climate change may be affecting global timekeeping as the melting of ice sheets in Greenland and Antarctica slows the Earth’s rotation.

Some good news

Despite the disruption of the pandemic era, overall global life expectancy has continued to improve, thanks to breakthroughs in combating lethal problems such as diarrhoeal and typhoid diseases.

Source: Economy - ft.com