MetroIntelligence Economic Update by P. DUFFY
Federal Reserve hikes its target rate 25 basis points, but hints at possible pausing
The Committee decided to raise the target range for the federal funds rate to 5 to 5-1/4 percent. In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plan.
March job openings fall to 9.6 million jobs vs. 5.8 unemployed persons
The number of job openings decreased 3.4% to 9.59 million on the last business day of March. While hires were flat at 6.15 million, quits fell 3.2% to 3.85 million. The quits rate fell to 2.5% to match January’s figure. Still, the ratio of quits to open jobs remained steady at 40%. With 5.8 officially unemployed persons in March, the overhang of open jobs fell 7.1% to 3.75 million. For every employed person March, there were 1.64 open jobs, a figure that has been steadily declining.
April service sector economic index rises to 51.9 percent despite higher interest rates
In April, the Services PMI® registered 51.9 percent, 0.7 percentage point higher than March’s reading of 51.2 percent. The composite index indicated growth in April for the fourth consecutive month after a reading of 49.2 percent in December, the first contraction since May 2020 (45.4 percent). There has been a slight uptick in the rate of growth for the services sector, due mostly to the increase in new orders and ongoing improvements in both capacity and supply logistics.