The US economy continues to produce more jobs despite being close to full employment. The unemployment rate has remained at or under 4% since April 2018 while annual increases in hourly pay have remained above 3% for the past six months.
According to the US Bureau of Labor Statistics, the US economy created 196,000 jobs in the non-farm sector in March. Economists had been expecting around 180,000 additional positions.
US bond yields finished a little lower across the curve while the US dollar was largely unchanged against other major currencies. By the end of the day, 2-year Treasury bond yields had lost 2bps to 2.31%, 10-year yields had fallen by 3bps to 2.49% and 30-year yields had lost 2bps to 2.91%.
The figures may have had some impact on expectations of future Federal Reserve policy as the implied probability of a December rate cut was pruned back again, although this process has been taking place each day since the end of March. By the end of the day, federal funds futures implied a 51% chance of a rate cut at the FOMC’s December meeting, down from the previous day’s figure of 55%.
After revisions to previous months’ figures, the unemployment rate remained unchanged at 3.8% as the total number of unemployed people fell by 24,000 to 6.211 million while the total number of people employed in both the farm and non-farm sectors fell by 201,000 to 156.748 million.