Broken bellwether: American Jobs
Today’s labour-market report will be the last before the Federal Reserve meets in mid-June. This year payrolls have grown by an average of 185,000 a month, helping to bring the unemployment rate down to 4.4%.
Economic growth, which was a plodding 1.2% at last count, will probably surge in the second quarter. The Fed is worried that the job market might overheat, sparking inflation, yet there is scant evidence of that happening yet. In fact, core inflation, which excludes food and energy prices, fell to 1.5% in April, according to the Fed’s preferred measure. Nonetheless, markets put the chances of a rate rise at more than 90%. The central bank may also commit to shrinking its balance-sheet, which grew substantially after the financial crisis. A bumper jobs report would make tighter monetary policy a near-certainty. Whether it would portend higher inflation is a tougher question.

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