US jobs report
The Department of Labor (VTI) is scheduled to release March employment data on April 5. This release has gained increased importance because February employment data came in much below expectations, and markets are awaiting the latest report to find out if the February job report was just a blip or the beginning of a sustained downtrend.
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February’s weak jobs report
As we highlighted in Markets Tank as Weak Jobs Report Exacerbates Slowdown Concerns, job additions in the US came to just 20,000 in February, which was much weaker than economists’ expectations of 180,000. Therefore, the jobs growth in February was a big miss. February also marked the worst month in job creation since September 2017.
Expectations for March jobs report
In March, economists are expecting job additions of 180,000. If job additions again come in weaker-than-expected, the markets’ concerns regarding a US slowdown could strengthen, leading to a sell-off.
Tight labor markets have been one of stock market bulls’ most popular arguments. The markets have shrugged off other weaker economic reports on the existing strength in labor markets. If, however, the labor markets also start showing signs of withering away, the markets could be in for a hard fall. A strong jobs report, on the other hand, would give strength to the argument of the resilience of the US economy (IVV) in the face of global slowdown concerns.
The US equity markets have gained strength with the S&P 500 (SPY), the Dow Jones Industrial Average Index (DIA), and the NASDAQ Composite (QQQ) up 13.0%, 11.1%, and 16.5%, respectively, in the first quarter. The state of the labor market could decide the future direction of the markets.