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Jobs Report Sparks Concern Over Profit Margins

Monday, 9 Apr 2007 | 1:47 PM ET

It’s no surprise U.S. markets are not exactly rallying on the better-than-expected March jobs data, one analyst told Sue Herrera on “Power Lunch.”

“The stock market might be a little bit unhappy that this latest jobs report practically rules out a Federal Reserve interest rate anytime soon, in part because of faster wage growth that eventually could help squeeze profit margins,” said John Lonski, chief economist for Moody's Investors Service.

Jobs: Economic Greenlight
A look at what Friday's jobs numbers really mean, with John Lonski, Moody's Investors Service chief economist; Rick Santelli, CNBC bond market reporter; and CNBC's Sue Herera

The U.S. Labor Department said Friday that 180,000 new jobs were created in March, and the unemployment rate fell to 4.4%. Economists had expected a gain of 135,000 jobs. The Dow Jones Industrials rose moderately in midday trading.

“If the labor market tightens further, wage growth will accelerate, and that’s not going to sit well with policy makers. And a lot of equity investors will not like that when they notice the degree to which this begins to squeeze margins,” Lonski said.

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  • Sue Herera is a founding member of CNBC, helping to launch the network in 1989. She is co-anchor of "Power Lunch."

  • Tyler Mathisen co-anchors CNBC's "Power Lunch." Mathisen also co-anchors "Nightly Business Report produced by CNBC."

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Kenny Polcari