To paraphrase pop singer Britney Spears, ‘oops, it’s done it again’ would probably be a fair response to last week’s US non-farm payrolls which once again blew past expectations and dashed any lingering hopes of an early cut in interest rates.

Rather than 214,000 news jobs being added last month there were 303,000 new roles created, making March the 39th straight month of employment growth and suggesting the economy is a long way from going into recession.

There was slight comfort from the fact wage growth slowed somewhat, but it remains stubbornly above the Federal Reserve’s target of 3% to 3.5% and the recent bump in crude oil means gasoline prices are going up which won’t help bring inflation down either.

Market commentators put the strength of the labour market down to ‘US exceptionalism’, although the main areas of growth last month appeared to be in government and the health care sector.

Construction was another area of growth, which makes sense as the seasons change and the weather improves, and leisure and hospitality returned to its February 2020 (pre-pandemic) level for the first time.

Investor confidence will face another test on Wednesday, just before Shares goes to press, in the shape of the US consumer price data and in particular the ‘core’ reading which strips out food and energy prices to give an underlying reading of inflationary pressures.

Outside the US there is an ECB (European Central Bank) meeting, where rates are likely to be kept on hold a while longer, and UK February GDP which is also unlikely to surprise.

Next week’s focus will be on UK and euro-zone inflation, where as in the US the ‘core’ reading will be closely watched, along with the German ZEW investor sentiment survey which has been particularly gloomy in recent months. 

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