Despite much weaker jobs numbers in March, Capital Economics analysts say the U.S. recovery is still firmly on track. “The run of weaker economic data hasn’t shaken our belief that, now credit is flowing more freely and the fiscal drag has faded, the recovery will strengthen,” says Paul Ashworth, chief U.S. economist for the UK-based research firm. “Nevertheless, given how skittish Fed officials are, this could be used as yet another reason to delay the first rate hike until sometime in the second half of this year,” he adds. Ashworth explains that because employment figures are based on a survey only covering one week each month, the numbers don’t always “align with the activity and spending data, which cover the entire month.” “Furthermore, nearly every other indicator suggests that the labor market is in good health,” he says, noting that ISM non-manufacturing employment index improved in March, as well as the job opening rate, hit a 14-year high in February while voluntary quits rate are trending lower. “The resilience of these other indicators suggests that payroll growth will rebound in April,” he says.
