Citi economist Veronica Clark expects to see 490,000 jobs added in the United States in March with the unemployment rate falling to 3.7%.
The economist argues that the consistently strong jobs data in recent months is likely to allow the Fed to focus more on inflation, hence she expects to see a 50bp hike in May.
The unemployment rate could become just as important to watch as average hourly earnings for signs of a tight labor market, with further declines likely to increase the Feds sense of urgency in raising rates at least back towards their estimated long-run neutral rate. We expect a very low unemployment rate throughout the summer months to support our base case for 50bp hikes at each of the next four FOMC meetings, implying the Feds long-run nominal neutral rate of ~2.5% is reached by September, Clark wrote in a client note.
Despite the very strong labor market, the economist isnt expecting to see the continuation of robust job growth as the pool of available workers continues to shrink.
Clark expects to see the average hourly earnings rise 0.3% MoM.
By Senad Karaahmetovic