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Key labor market data out this morning offered no surprises, and maybe that was the surprise! Those markets open today were up modestly, notably dollar cross rates. Dollar/Sterling and Euro/Dollar were 1.24 and 1.09 after the report. For context, it’s worth noting that non-farm payroll data beat prior forecasts for eleven-straight months so perhaps coming in as expected is the surprise.

Non-farm payrolls came in pretty much as expected this morning, with non-farm payrolls at 236,000 in line with the forecast 240,000, still cooler than the revised 326,000 jobs added last month. The unemployment rate a shade lower at 3.5% versus 3.6% last month. Average hourly earnings, a key factor in inflation, slowed to 4.2% year-on-year compared to 4.6% last month.

Last week saw negative employment data which set the scene for a softer jobs market. Initial claims for unemployment insurance rose sharply in February and showed a clear upward trend after the Labor Department revised data to better reflect seasonal factors.  Job openings dropped sharply in February after strength, bringing data closer to the historical average. Employer surveys showed manufacturing and service sectors contracting rather than expanding.

Where does this leave interest rate forecasts compared to the current 4.5%-4.75% range? The FOMC's median projection in its recent quarterly “dot plot” expected the policy benchmark to peak at 5.4% at the end of 2023 – a quarter point higher than what economists predict. This report is unlikely to change anyone’ opinion, least of all the Federal reserve policymakers. (We can all get back to our anticipated Easter break plans.)

Analysis by Paul Walton, Financial Writer

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