With the stock market recently wrapping up a historically strong first quarter, Wall Street is keeping an eye out for the March jobs report due this Friday, April 5. Will the stock market crash?
Well, probably not. By and large, economists believe the labor market will hold strong in March, projecting 200,000 added non-farm payrolls. This should put the unemployment rate unchanged from February, at 3.9%.
“We’re hopeful for [a] kind of Goldilocks story with the jobs report where we get some continued softening, but not too much,” U.S. Bank Wealth Management Senior Vice President Lisa Erickson told Fox Business.
The notion of a mildly softening labor market remains important, given the Federal Reserve’s current rate-cut considerations. Indeed, should the jobs data come out hotter than expected, it would give the central bank more leeway to delay lowering interest rates from its current restrictive level — something most of Wall Street dreads.
On the other hand, should the jobs market soften too much, it could strengthen the case for a late-cycle recession. While this would push the Fed to cut rates sooner, it would come at the cost of the country’s economic health.
Stock Market Crash Concerns Swirl Ahead of March Jobs Report
By most metrics, things are going quite well for the economy lately. Unemployment has hovered under 4%, inflation is down substantially from last summer’s peak, all while gross domestic product (GDP) has continued to climb. And that’s despite elevated interest rates.
This hasn’t been lost on the Fed, which wrote in a statement at the March policy meeting that “recent indicators suggest that economic activity has been expanding at a solid pace.” The Fed continued, “Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.”
If you recall, the U.S. economy added 275,000 jobs in February, well above projections. While the projected drop to around 200,000 in March is notable, it’s still historically strong.
Worth noting, in the February jobs report, the Bureau of Labor (BLS) revised December and January’s employment figures. The BLS lowered December’s added jobs from 333,000 to 290,000 and revised January’s figure to 229,000 from 353,000. In total, this places employment for December and January 167,000 jobs lower than previously reported.
However, that hasn’t hampered economists’ expectations for this week’s labor report.
“For Friday’s employment report, we’re expecting that the jobs numbers will carry on with the strong momentum of the last few months,” noted Jefferies economists. “The revisions have been extreme lately, and the composition of payrolls has been less encouraging than it was throughout 2023, but we have not seen enough evidence in the peripheral labor market data to make a case that job growth is going to fall off a cliff.”
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
