The US Dollar declined from its highest level in eight months after the latest US payrolls data disappointed the market. Employers in the world’s largest economy added fewer jobs in March than forecast, one bright point in the data however was that the nation’s overall jobless rate has now fallen to 7.6%
The data took economists by surprise as many had been predicting that at least 190,000 new jobs would be created. Instead US payrolls grew by just 88,000 workers, the worst gain in nine months and far worse than the revised gain of 268,000 recorded in February. The slower pace of growth in payrolls marks a steep reversal of the recent trend in which the labour market appeared to be stepping up its pace of recovery. It also comes after Washington increased taxes in January and just as across-the-board federal budget cuts began in March.
“The payroll report was absolutely dreadful , the fact that this is not just below expectations, but also below 100,000 is eyebrow raising, weaker-than-expected reports that break the trend add to the likelihood of the Federal Reserve holding true to its easing promises” Said Ravi Bharadwaj, senior analyst at Western Union Business Solutions.
Analysts are expecting that the Federal Reserve will now opt to continue with its quantitative easing programme now that the jobs market appears to sliding back from its cut-off target. As a result of the data the US Dollar could now begin a period of devaluation as federal spending cuts have only just come into effect and are set to be a substantial drag on the US economy between April and June.
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