According to the ADP report released last week, private businesses in the U.S. created 145K jobs in March, below February’s reading of 261K and a forecast of 200K. This is a sign the labour market is cooling as consumer demand slows amid rising borrowing costs.

The closely watched nonfarm report came out last Friday and showed that hiring in the U.S. slowed in March as the Federal Reserve’s aggressive interest rate hikes started to take effect.

The U.S. economy created 236K jobs in March, which is the lowest reading since December 2020. The print came in below market expectations of 240K and below February’s reading of 326K. While jobs growth has slowed, it did not decline enough to compel the Fed to take its foot from the accelerator.

As U.S. employment maintained a strong pace in March, it pushed the unemployment rate down to 3.5% from 3.6% in February. The print came below market expectations of 3.6% and is close to its lowest level since the 1950s, showing the labour market continues to be tight.

While investors remain hopeful that rate hikes will come to an end, the Fed is data-dependent, with jobs and inflation being a key in determining its monetary policy. Decent jobs growth, low unemployment, and still high inflation rates are raising the odds of a final 25-basis point hike when the Federal Reserve meets in May.

The Easter holiday have restricted market moves after the release of last week’s jobs report, however; investors are bracing for a busy week of economic data, with the latest Consumer Price Index and the latest Federal Open Market Committee Monetary Policy Meeting Minutes due on Wednesday, followed by the Producer Price Index data due on Thursday.

Source: Tradingview

As the recent banking turmoil raised fears that the Federal Reserve’s aggressive rate hikes over the past year could tip the U.S. economy into a recession and could trigger more bank failures, the start of the first quarter banks earning season, which kicks off on Friday will be closely watched as it would provide clues on the health of the sector.

Last week’s uninspiring private payrolls and job openings data, had initially raised hopes the Fed would pause its rate hikes, however; after Friday’s nonfarm payroll’s report the odds of a 25-basis point rate hike by the Fed next month rose from 57% to almost 70%, according to the CME FedWatch tool.

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