Halister News

(Bloomberg) -- Sixth straight increase in labor force participation rate in March employment report to 63%, highest level since March 2014, if sustained, will suggest “there is more capacity in the labor market, in excess of what is implied by the current 5% unemployment rate,” BofAML economists led by Michelle Meyer say in note.

• This “provides another reason for the FOMC to engage in a very slow and cautious hiking cycle, which would likely dampen USD strength”
• Participation rate “is broadly dominated by long-run demographic moves as opposed to business cycle moves,” and controlling for those implies an unemployment rate “in the low 6% range”
• Fed still is likely to hike twice this year (June and Dec.), driving USD higher, assuming that “policy will still be accommodative enough to underpin the U.S. recovery and support a continued rise in the LFPR”