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Welcome to jobs week.
The March employment report, due out on Friday, will be the main focus for investors this week. They will be watching closely to see if the labor market is powering ahead, resilient despite still-sour economic sentiment on Main Street, or if the data is beginning to show a sustained slowdown.
It could be another case of “bad-news-is-good-news” on Wall Street if higher unemployment prompts the Federal Reserve to lower interest rates.
Fed Chair Jerome Powell said last week that a weakening labor market would be a reason to reduce interest rates. And while analysts aren’t forecasting any sudden plunges in employment, there are some signs that labor-market conditions could come in weak this month.
“There are only two economic metrics this week that I’ll be really paying attention to: nonfarm payrolls report and the unemployment rate,” said Dave Sekera, Morningstar’s chief US market strategist. “The Fed will be paying very close attention to both of these numbers; they are watching the labor market as part of their evaluation for monetary policy going forward.”
What’s happening: Analysts expect nonfarm payrolls to increase by a seasonally adjusted 192,500 in March, down from an increase of 275,000 in February, according to FactSet data.
Hourly earnings are expected to rise by 4.1% year-over-year in March, a tick down from 4.3% in February.
Still, the overall unemployment rate is expected to slip to 3.8% from 3.9% the month prior.
“What we’re all looking for here are those type of Goldilocks ‘not too hot, not too cool’ numbers,” said Sekera.
“We want payrolls to be high enough to indicate that the economy is still holding up, even in the face of restrictive monetary policy, so that even though we think the rate of economic growth is slowing, we’re still looking for that soft landing,” he said. A soft landing is when the Fed tames inflation without setting off big job losses or a recession. “Then again, we’re also looking for a number that’s low enough so that we wouldn’t be concerned about wage inflation re-igniting.”
Analysts from Goldman Sachs wrote in a note on Monday that Friday’s expectations include a boost from “above-normal immigration as new entrants to the labor force are matched to open positions.”
The analysts said that there was a strong pace of job gains and low pace of layoffs last month but job growth will still likely come in slower than February data, which got a boost from abnormally good weather.
Yes, but: Some analysts think that traders are putting too much emphasis on Friday’s report.
It’s hard to imagine that this jobs report will substantially move the needle on Fed policy, said Michael Brown, a senior research strategist at Pepperstone.
Powell just recently said that the central bank expects unemployment to move higher over the rest of the year, and that the risks to the Fed’s dual mandate to achieve maximum employment and keep rates are coming back into “better balance,” he noted.
Instead, Brown thinks the “key determinant” for the timing of the first rate cut will be how confident officials feel in bringing inflation to their 2% target. That means the next Consumer Price Index report – expected on April 10 – will be important.
Feeling good: Regardless of what analysts think, consumers seem to be feeling relatively good about the labor market.
The Conference Board’s February Consumer Confidence survey found that “Consumers’ appraisal of the labor market was more positive in March” than in previous months.
More than 43% of consumers said jobs were ”plentiful,” according to the survey. That’s up from 42.8% in February. Nearly 11% of consumers said jobs were “hard to get,” down from 12.7% the month prior.
The week ahead: While the main event this week is Friday’s jobs report, there’s plenty of other jobs data this week for traders to grab on to.
The Job Openings and Labor Turnover Survey (JOLTS) is scheduled for Tuesday, and ADP’s private employment report for March is due on Wednesday morning.
It’s also a busy week for the Fed, with nine separate Fed speeches expected. But the spotlight will be on Powell as he delivers a speech on his economic outlook at a Stanford forum on Wednesday.
Shares of Truth Social owner Trump Media & Technology Group plunged Monday after the company disclosed that it lost more than $58 million and generated very little revenue in 2023. Former President Donald Trump is the company’s majority shareholder, and his net worth tumbled by more than $1 billion Monday as a result, reports my colleague Matt Egan.
The figures underscore why some experts warn Trump Media’s multibillion-dollar valuation defies logic and is reminiscent of the meme stock craze.
In a regulatory filing on Monday, Trump Media said it lost $58.2 million in 2023, compared with a profit of $50.5 million in 2022.
The Truth Social owner generated just $4.1 million in revenue, although that was up from $1.5 million in 2022.
Not only that, but revenue tumbled 39% year-over-year in the fourth quarter to just $751,500. That’s not what investors want to see from any start-up, especially one valued at these levels.
Shares of Trump Media tumbled 21% Monday following the new filings, though they are still up nearly 200% so far this year.
As of Monday, about half a million fast food workers in California are making at least $20 per hour, $4 higher than the overall state minimum wage, reports my colleague Natasha Chen.
The new rate applies to restaurant chains with more than 60 nationwide locations and is a result of a years-long fight by workers to establish better wages and working conditions, specifically in California’s fast-food industry.
The law also creates a fast-food council, a first of its kind in the US, with representatives from both the restaurant industry and workers, who can increase the wage annually for the rest of the decade, in pace with inflation or up to 3.5%, whichever is higher. This council can also recommend standards for fast-food worker safety and work with existing state agencies to investigate issues like wage theft.
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