U.S. stock futures are pointing to a lower opening on Monday following Friday’s disappointing non-farm payroll job report for the month of March that came in way below estimates and surprised investors who were expecting another robust month of 200,000 plus jobs added to the U.S. economy which has occurred during the past 12 consecutive months.
European and U.S. stock markets were closed last Friday in observance of Good Friday. European markets will remain closed on Monday.
Economists are now left speculating about the reasons the U.S. economy added only 126,000 jobs in March when the weather was even colder across much of the country in February and job gains increased to 264,000.
Clearly there is larger story line playing out with the 138,000 job decline from February to March than to blame it on the loss of 11,000 mining jobs that showed up in Friday’s job report for March.
Some of the decline may be attributed to the rising U.S. dollar which has been steadily climbing in 2015, making U.S. exports more expensive in international markets, combined with the expectation of an interest rate hike in 2015 that is increasingly looking more likely to occur late in 2015 and not in June, even with the Federal Reserve stripping away the “patient” word during their last Fed meeting when describing the timeline for raising interest rates.
U.S. businesses make real time hiring decisions based on economic forecasts that factor in currency and interest rate fluctuations.
A rising U.S. dollar combined with the expectation of further dollar strength in 2015 following an interest rate hike has the potential to scare U.S. businesses away from hiring.
Another reason for the job decline in March may be from the huge drop in oil prices that has fallen over 50 percent since June 2014 due to weaker international growth, an oversupply of oil in the global market, and decisions by OPEC members to not cut oil production in late 2014 or early 2015.
Lower oil prices combined with a strengthening U.S. dollar hurts the balance sheets of energy companies which impacts hiring decisions in areas such as shale drilling.
Corporate earnings reports will get moving this week with Alcoa reporting their first quarter 2015 results on Wednesday.
Economic data this week is lighter compared to last week with the FOMC minutes on Wednesday taking central stage and weighing in about Fed policy during their 3/18/15 FOMC meeting.
ISM Services- 10:00 EST
JOLTS Jobs Openings
MBA Mortgage Index, Crude Inventories, FOMC Minutes
Initial and Continuing Claims, Wholesale Inventories, Natural Gas Inventories
Export Prices ex-ag. and Import Prices ex-oil, Treasury budget