What are US Economic reports, telling us ?
US market on Thu, 03 April 2025 came crashing down hard for the first time in the longest time, as a result of the mad hatter Trump provoked a global trade war by raising tariffs worldwide.
US market reacted “decisively” by plunging into the abyss without hesitation. (see below)
While negative sentiments swept through the market on Thursday, US economic reports continued to be released as planned.
On Thursday, the two reports released were :
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US weekly jobless claims for week ending 29 Mar 2025.
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ISM Service purchasing manager index (PMI) for March 2025.
US weekly initial jobless claims
US Weekly Jobless claims.
For week ended 29 March, US Labour Department showed initial claims for state unemployment benefits fell by -6,000 claims to a seasonally adjusted 219,000 from last week’s data of 225,000. (see above)
For now, the report is indicating continued labour market stability despite broader economic uncertainty.
US weekly continuous jobless claims
US Weekly Continuous Jobs claims.
Unfortunately, the same could not be said for the US Weekly Continuous jobs claims report.
Latest, continuing claims rose to 1.9 million, the highest since November 2021.
On the other hand, this indicates - mounting challenges for unemployed workers in finding new jobs.
State of US Economy under Trump.
Economic data released (so far) during Week beginning 31 Mar 2025, paints a mixed picture of US economy and labour market.
Economic activity in US Manufacturing sector contracted in March 2025, after two consecutive months of expansion and preceded by 26 straight months of contraction.
Manufacturing PMI® registered 49%, -1.3% lower compared to February’s 50.3%.
Key components, including new orders (45.2), production (48.3), and employment (44.7), all declined, reflecting weakening demand and reduced hiring in the manufacturing sector.
US JOLTs - February 2025.
US jobs opening & labour turnover survey (JOLTS) report for February 2025, showed a decline in job openings to 7.6 million.
This is down from January's upwards revised 7.762 million and -877,000 fewer jobs YoY.
Job openings rate remained steady at 4.5%, while hires (5.4 million) and separations (5.3 million) were unchanged, indicating a stable but cooling labour market.
Quits fell by -273,000 YoY to 3.2 million, reflecting reduced worker confidence in finding better opportunities amid rising economic uncertainty.
Layoffs and discharges held at 1.8 million, while the quits rate stayed at 2%, signaling a shift in labour dynamics as employers become more cautious about hiring and workers less willing to switch jobs.
The data suggests a softening labor market with declining demand for workers as economic uncertainty grows, exacerbated by recent tariff announcements.
Before I forget, there is also the US ADP employment report (March 2025) that I have covered in my post yesterday (click here ! for details, Repost to share)
Overall Assessment.
Based on reports released so far, hinting the health of US economy and the reciprocal tariffs initiated by Trump on 02 April late afternoon, US economy is likely to be swayed :
(1) Economic Effects:
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The new tariffs raised the effective US tariff rate by +11.5%, resulting in a projected -0.5% reduction in 2025’s GDP growth
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Price levels are expected to rise by +1.3%, translating into an average household loss of -$2,100 annually.
(2) Labour Market Implications:
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Higher production costs and reduced global demand may (a) lead to layoffs and (b) slower hiring as businesses adjust to elevated input costs.
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Sectors reliant on imports, eg manufacturing & retail, are likely to face significant challenges.
(3) Long-Term Outlook:
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Analysts warn that the tariffs could (1) leave the economy persistently smaller (-0.4% annually) and (2) exacerbate inflationary pressures while dampening consumer spending and investment.
In summary, although the labour market remains resilient now, the combined effects of slowing economic growth and new tariffs are likely to strain jobs creation and wage growth in the coming months.
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Do you think US economy will slip into recession, with the latest round of tariffs levy ?
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Do you think US raised tariffs will result in a global trade war amongst the bigger economies ?
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