"It's good to see good economic news," El-Erian said on Bloomberg TV after the March report showed jobs growth cooling in a still-robust economy.
Mohamed El-Erian
The March US jobs report showing a slowdown in hiring in a still-robust economy should boost stocks and keep the Federal Reserve on course with raising interest rates to fight inflation, economist Mohamed El-Erian said Friday.
The world's largest economy added 236,000 nonfarm payrolls last month, shy of the median forecast of 239,000 among economists and below February's upwardly revised gain to 326,000.
The unemployment rate fell, and the labor force participation rate rose, indicating people were looking for jobs and going back to work at the highest pace since before the COVID pandemic hit.
"It's good to see good economic news," El-Erian, chief economic adviser at Allianz, said on Bloomberg TV after the Labor Department released its report.
The data also bodes well for stocks, he said.
"We are making this transition where the stock market was obsessed with interest-rate risk to one that is concerned about credit risk," he said. El-Erian was referring to the recent banking industry turmoil set off by last month's failures of Silicon Valley Bank and Signature Bank.
"This number here suggests that it should be less concerned about credit risk for the moment," said the economist who also serves as president of Queens' College in Cambridge, England.
US stock futures turned higher after the Labor Department released its data. S&P 500 e-mini futures and Dow e-mini futures each rose by 0.2%. Nasdaq-100 futures also pushed up by 0.2%. Trading in stock futures was open until 9:15 a.m. Eastern time on Friday, while broader equity trading was closed for the Good Friday holiday.
The Federal Reserve in raising interest rates has been trying to cool the jobs market to tamp down on inflation. At the same time, it wants to keep the economy from running into a deep recession.
The job report "increases the probability that they'll go 25 basis points in early May," El-Erian said of the Fed's next policy decision. "Of course, the CPI numbers can be important. But given this, this does not justify a pause given how they've been thinking."
The March report showed "solid job creation, including in services – both constituting nice upside surprises for the economy," he wrote later in a message on Twitter.
The S&P 500 on Thursday closed up 0.4% at 4,105.02.
—Mohamed A. El-Erian (@elerianm) April 7, 2023
