Analysts: Jobs Data May Signal Bottom of Economic Slowdown

AP

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The stronger-than-expected March jobs report signals the worst of the economic slowdown may be over, but more bumps still lie ahead, two analysts told Liz Claman on “Morning Call.”

“We’re hitting bottom on the economic growth and we should expect more positive surprises as the year progresses,” said Lakshman Achuthan, managing director at the Economic Cycle Research Institute.

The Labor Department said Friday that 180,000 new jobs were created in March, amid a surprise surge in construction jobs. Economists had expected a gain of 135,000 jobs. The unemployment rate, meanwhile, fell to 4.4%.

But you can expect more negative data ahead, including a weak reading on first-quarter GDP, says David Kelly, managing director and senior economic advisor at Putnam Investments.

“I think the economy will strengthen in the second half of the year, but I think there is some bad economic news to deal with before we get there,” Kelly said.

Achuthan says it’s normal to have “a lot of confusion” during this time.

“We don’t have any recession here, I think those fears are largely being laid to rest by a lot of the data coming out,” he said. “But we’re still having of what seems to be a cyclical bottoming in the growth rate in the economy, and when you’re at a turning point like that, you’re going to get mixed data.”

The important thing, both analysts said, is that the Federal Reserve will continue to stay on hold on interest rates, with the lack of a runaway indicator of inflation.

“If we do get a soft landing, long term interest rates could move up a bit and stocks look cheap in this environment,” Kelly said.