US Labour Market Still Tight; Trade Seen Subtracting From Q1 Growth

• Despite an increase in the number of Americans filing new claims for unemployment benefits, the labour market remains tight. Although layoffs rose to a 14-month high in March, job cuts were relatively unchanged compared to the same period last year. Worker shortages persist in industries like construction.
• The strength of the economy, coupled with persistently high inflation, may prompt the Federal Reserve to delay anticipated interest rate cuts this year. Fed Chair Jerome Powell has emphasized that the central bank has time to deliberate over its first rate cut.
• The trade deficit widened in February, reaching $68.9 billion, with imports rising to their highest level since October 2022. While exports increased, particularly in industrial supplies, materials, and food, imports surged across various sectors. The trade gap is expected to hinder GDP growth in the first quarter, potentially subtracting as much as 0.75 percentage points.
• The Atlanta Fed lowered its first-quarter GDP growth estimate to a 2.5% rate, down from a previously estimated 2.8% pace. Trade dynamics, particularly the strength in imports reflecting firm domestic demand, are anticipated to contribute to a larger drag on first-quarter GDP growth than initially anticipated.

(Source: Reuters)