Stocks fall as strong US jobs data may delay rate cut

Joe Biden
Joe Biden: a milestone for the US

Stock markets fell after stronger than expected jobs growth in the US pointed to a delay in cutting interest rates.

The economy added 303,000 jobs last month, far more than forecast, and the 39th straight month of job gains in the US. The unemployment rate fell back to 3.8%.

Traders in the UK intrepreted the data as setback to hopes of an interest rate cust and the FTSE 100 fell more than 80 points before closing 64.73 points lower at 7,911.16.

Joe Biden hailed the report as “a milestone in America’s comeback” and it practically eliminated the likelihood of the US economy sliding into recession.

“Three years ago, I inherited an economy on the brink,” said the president. “With today’s report of 303,000 new jobs in March, we have passed the milestone of 15m jobs created since I took office. That’s 15m more people who have the dignity and respect that comes with a paycheck.

Economists had pencilled in 192,000 jobs for March, but firms have continued to hire in ever greater numbers in spite of higher costs.

US inflation is down to 3.2%, close to the UK rate,  and unemployment has been below 4% for two years, the longest such streak in decades. It stood at 6.7% when Mr Biden took office.

The Federal Reserve has tackled soaring prices by raising its benchmark interest rates from near zero to over 5% over 16 months but, along with other central banks, it has put hikes on pause since the end of last year and the markets have priced in the first cuts in June or August. The next rate decision is in May.

However, the strength of the US economy has raised uncertainty over the timing of an interest rate cut amid warnings that it would reverse the gains made on inflation. The first cut may now be delayed until September.

Fed chairman Jerome Powell left the door open this week when he said: “Easing policy too late or too little could unduly weaken economic activity and employment.”

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