Strong Jobs Report Eases Recession Fears

Job growth in March returned after a weak February as 196,000 jobs were created as opposed to 175,000 expected by economists, which eased recession fears on Friday.

The better-than-expected payrolls brings the three-month average to a strong 180,000 jobs created per month. That number is lower than the 223,000 jobs created in 2018, but falls in line with a robust labor market.

Meanwhile, the unemployment rate held steady at 3.8 percent, but lower-than-expected wage gain came in at just 0.1 percent after February’s better-than-expected 0.4 percent. Nonetheless, all signs still point to a strong labor market overall.

“I think this is a positive number for risk. It’s a good combination of strong employment numbers and soft wage or inflation numbers. it allays concerns about a slowdown in U.S. growth. You have strong growth but not necessarily enough to force a market repricing toward a more hawkish Fed,” said Brian Daingerfield, head of G10 foreign exchange strategy at NatWest.

Lower Unemployment Claims

Data released by the Labor Department on Thursday revealed that jobless claims in the U.S. hit a 49-year low, suggesting that the labor market is still strong despite fears of a global economic slowdown.

This latest jobs data comes after U.S.-based companies had less layoffs during the month of March, but job cuts during the first quarter were at their highest since 2015–a possible sign of a fading $1.5 trillion tax cut package. Initial claims for state unemployment benefits fell by 10,000 to a seasonally-adjusted 202,000 for the week ended March 30–the lowest level since early December 1969.

Economists polled by Reuters were expecting claims to rise to 216,000. Analysts view these latest numbers as continued signs of a labor market that is still operating at full steam.

Nonetheless, these latest numbers come after employment data released by ADP and Moody’s Analytics showed that job growth hit an 18-month low in the month of March. Private payrolls went up by 129,000 for the month, which fell below the 173,000 that economists surveyed by Dow Jones were expecting to see.

Furthermore, a February employment data revision did show an increase of 197,000 as opposed to the initial number of 183,000. It was the lowest figure since March 2017 when private payrolls increased by 111,000.

Related: S&P 500 Rises to End the Quarter

ETFs to Play

Will continued strength in the labor market continue to fuel U.S. equities over those in the international markets?

For investors looking for continued upside in U.S. equities over international equities, the Direxion FTSE Russell US Over International ETF (NYSEArca: RWUI) offers them the ability to benefit not only from domestic U.S. markets potentially performing well, but from their outperformance compared to international markets.

Conversely, if investors believe that international markets will outperform U.S. domestic markets, the Direxion FTSE International Over US ETF (NYSEArca: RWIU) provides a means to not only see international markets perform well, but a way to capitalize on their outperformance compared to the U.S. markets.

For more market trends, visit ETF Trends.