The US economy is demonstrating resilience in the face of rising inflation, with a surge in job growth and a steady increase in wages, according to recent reports. Despite the challenges, the economy is showing signs of strength, with the creation of 303,000 jobs in March, marking a significant acceleration in employment growth.
The lion's share of job growth came from construction, leisure and hospitality, healthcare and social assistance, and state and local government, accounting for 231,000 new jobs or 76% of new jobs created. However, the manufacturing sector saw no change in employment, and there was almost no growth in employment in transportation and warehousing, information, financial services, or professional and business services.
Interestingly, despite the acceleration of employment growth, the number of intended job dismissals continues to rise. A survey conducted by Challenger, Grey, and Christmas found that in March, US-based companies intended to dismiss 90,309 workers, the most in 14 months. This partly reflected Federal government intentions to dismiss 34,000 workers. However, this doesn't necessarily indicate a weak labor market. As one industry expert explained, "there is plenty of churning in the job market, with jobs being eliminated while others are created."
Average hourly wages in March were up 4.1% from a year earlier, the lowest increase since June 2021. Despite a tight labor market, wage growth is decelerating. However, wages are still rising faster than inflation, providing households with an increase in purchasing power.
The US inflation rate accelerated for a second straight month to 3.5% in March 2024, the highest since September, compared to 3.2% in February. Energy costs rose 2.1%, with gasoline increasing 1.3%, while utility gas service and fuel oil fell less.
The US dollar has also shown resilience in the face of inflation. The ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, rose an average of 0.45% in the 30 minutes after the CPI release, according to Bank of America strategists Vadim Iaralov and Howard Du.
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