(April 6 – 12:10 ET) – Today’s U.S. jobs report came in worse than analysts expected, sparking talk of a rate cut by the U.S. Federal Reserve, before its next meeting.

The report reflected a loss of 86,000 jobs. Manufacturing continues to lead the way down, its eighth straight down month, but now the service industries are feeling the pain, sparking recession fears all over again. “It’s too soon to make a precipitous recession call. The March dip comes after two strong months,” says BMO Nesbitt Burns. “However, financial markets will tilt toward pricing in a recession. The data included provocative hints that conditions turned worse as the economy moved toward spring.”

The outlook is definitely gloomy for U.S. workers, says BMO. “While employment data are volatile, the March figures were uniformly negative. Perhaps the headline layoff announcements by major corporations
are the bottom line. Labour markets have ground to a halt and may be declining.”

While some economists are sounding alarm bells in response to today’s report, RBC DS Global Markets takes a more sanguine view, “The seemingly dismal report must be put in the context that an unexpected 429,000 jobs were created in January and February which appeared to run ahead of economic performance. The pullback is consistent with slower economic growth and, at most, another 50 basis points cut by the Fed on May 15.”

CIBC World Markets notes that markets are now split 50-50 over whether the Fed will offer a 25 bps inter-meeting cut in response to the report. However, it maintains, “Unless financial markets go into a further tailspin, we look for Greenspan to stay with his general preference for making rate changes on scheduled FOMC meeting dates, and to cut a further 50 bps at that time.
-IE Staff