The labor market continued to improve in March despite the month’s weaker-than-expected job growth, a report Wednesday from the Federal Reserve Bank of Kansas City said.
Faster growth in hourly earnings, the share of companies with jobs they can’t fill and other factors showed employment activity increased last month, the report said.
Momentum in the labor market also strengthened, the Kansas City Fed said, demonstrated in part by the University of Michigan survey on expected job availability.
The report follows Friday’s news that employment in March grew by 126,000, the smallest increase since December 2013.
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Labor conditions have been the focus of debate over when the Federal Reserve’s policy board, which includes Kansas City Fed president Esther George, would raise interest rates.
March’s employment report led many to assume the Fed would hold off on ending its zero interest rate policy that has prevailed since late 2008.
Wednesday’s report from the Kansas City Fed bolsters George’s previous call for an interest rate increase around the middle of this year.
Similarly, New York Fed president William Dudley said Wednesday that he can imagine scenarios in which the Fed raises rates at its late June meeting, according to Bloomberg News.
Others have signaled preferences for delaying the first rate increase further. Fed board member Jerome Powell said Wednesday that he saw a greater risk of damaging the economy by raising rates prematurely than from raising them too late and risk triggering inflation, Bloomberg said.
Fed Chairwoman Janet Yellen has said that the group’s recent decision to remove a promise to remain “patient” about ending zero interest rates did not mean it would be “impatient” about raising rates.
Fed policymakers will meet April 28-29.
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