Tags: Belski | jobs | Fed | rates

BMO's Belski: Weak Jobs Report Won't Keep Fed From Raising Rates

By    |   Friday, 03 April 2015 10:50 AM


The March jobs report was weak, but not weak enough to keep the Federal Reserve from raising interest rates this year, says Brian Belski, chief investment strategist at BMO Capital Markets.

Non-farm payrolls rose only 126,000 last month, the smallest gain since December 2013. The labor participation rate matched a 37-year low of 62.7 percent.

And wages climbed just 2.1 percent in the 12 months through March, equaling the average increase since the recession ended in June 2009.

"The report was mostly disappointing. It's not bad news, but it's not surprising," given corporate retrenchment and bad weather, Belski tells CNBC. "We don't think it takes the Fed off track from raising rates later this year."

Many economists expect the central bank to begin boosting rates in September. It has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008.

"2015 is turning into quite the transition year again as we kind of unwind the former thinking and wind up the real thinking. And the real thinking is down the line, rising interest rates is actually good for the stock market and good for the economy," Belski notes.

Other economists offer a mixed take of the jobs report too.

On one hand, "there's really no way to sugar coat this. This is a soft print all the way around, no matter how you slice it," Omair Sharif, rates sales strategist at Newedge USA, tells Bloomberg. "It seems that it's corroborating that the U.S. definitely hit a soft patch in the first quarter."

But, on the other hand, "hiring just took a breather in the month of March," he suggests. "I wouldn't read this as anything other than that. We should get back on track in the second quarter."

Even before the jobs data, things aren't looking so hot for the economy in the first quarter.

The Atlanta Federal Reserve's GDPNow model forecasts economic growth of only 0.1 percent, as of Thursday. And that's an improvement from Wednesday, when the projection was zero growth.

Thursday's news of the lowest U.S. trade gap in five years for February, gave the GDP projection a boost. But the trade improvement largely reflects the shutdown of West Coast ports that curbed imports.

The 0.1 percent estimate represents a sharp reduction from 1.9 percent in early February. The economy grew 2.2 percent in the fourth quarter.

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The March jobs report was weak, but not weak enough to keep the Federal Reserve from raising interest rates this year, says Brian Belski, chief investment strategist at BMO Capital Markets.
Belski, jobs, Fed, rates
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2015-50-03
Friday, 03 April 2015 10:50 AM
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