U.S. Added 916,000 Jobs in March as Economy Continues to Recover

Posted on 04/02/2021 8:41 AM

Republican House members introduce bill to bar racial favoritism for USDA programs

 


In Today’s Digital Newspaper


 

Market Focus:
• Job growth accelerates as U.S. economy prospers
• CME raises soybean futures maintenance margins
• Yield on 10-year Treasury notes slipped to 1.680% from 1.749% Wednesday
• Auto Makers have strong 2021 strong despite supply glitches
• Filings for U.S. unemployment benefits rose last week

• OPEC+ agreed to boost their collective production
• Copper prices have fallen about 7% from near-decade high hit in late February

 

Policy Focus:
• Graphical look at Biden’s $2.25 trillion ‘infrastructure’ proposals
• Biden taps five members of Cabinet to sell infrastructure and jobs plan
• NGFA sends letter re: funding mechanisms for surface transportation legislation
• Legislative proposal would bar racial favoritism from USDA programs

 

Energy & Climate Change:

• Eight states file amicus brief urging Supreme Court to uphold SRE ruling
• House Democrats introduce carbon pricing measure

 

Coronavirus Update:
• FDA authorizes first at-home rapid Covid-19 tests
• White House confident J&J will meet vaccine targets

 

Politics & Elections:
• Ryan announces $1.2 million raised in first quarter as he eyes Ohio Senate run


Other Items of Note:
• Iran nuclear deal participants to meet next week: WSJ
• Labor Dept. seeking H-1B wages input
• State Dept. to resume work on visa processing
• FEMA releases changes to National Flood Insurance Program  
• A million illegal immigrants expected to cross border in 2021: official
• Cotton AWP falls another week

 


MARKET FOCUS


 

U.S. equities yesterday: The Dow added 171.66 points, 0.52%, to 33,153.21. The Nasdaq rose 233.23 points, 1.76%, to 13,480.11. The S&P 500 closed above 4,000 for the first time to kick off the second quarter, buoyed by a continuing rebound in technology stocks. The broad stock gauge jumped 46.98 points, 1.18%, to 4,019.87, after closing out a fourth consecutive quarterly advance.

 

    It took just 434 trading days for the S&P 500 to set its latest 1,000-point milestone, far fewer than the 1,227 it needed to climb to 3000 from 2000.

 

    Yield on 10-year Treasury notes slipped to 1.680% from 1.749% Wednesday, its largest one-day drop since November. Yields posted their biggest one-quarter rise since 2016 in the first three months of the yea

 

On tap today:

 

     • U.S. nonfarm payrolls for March are expected to rise by 675,000 and the unemployment rate is expected to fall to 6% from 6.2% a month earlier. (8:30 a.m. ET) See item below for results
     • Atlanta Fed President Raphael Bostic speaks on inequality and the financial system at 11 a.m. ET.

 

U.S. jobs growth jumps as economic recovery strengthens. The U.S. economy added 916,000 jobs in March, up from 416,000 in February and the most since August. The unemployment rate edged down to 6% from 6.2% in February in a sign that the recovery was accelerating. A more encompassing measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons dropped to 10.7% from 11.1% in February.

 

     The non-farm payrolls data released this morning exceeded economists’ expectations and marked a sharp improvement from the upwardly revised 468,000 jobs created in February and 233,000 positions created in January. The U.S. economy lost 1.7 million jobs in March 2020 and more than 20 million in April, when the unemployment rate peaked at nearly 15%. More upbeat news is likely ahead as the March data was collected early in the month, before most states broadened vaccine access and before most Americans began receiving $1,400 checks from the federal government as part of the most recent relief package.

 

     The labor force continued to grow after losing more than 6 million Americans at one point last year. Another 347,000 workers came back, bringing the labor force participation rate to 61.5%, compared to 63.3% in February 2020. There are still nearly 5 million fewer Americans employed than a year ago while the labor force is down 2.2 million. Leisure and hospitality, a sector critical to restoring the jobs market to its former strength, showed the strongest gains for the month with 280,000 new jobs. Bars and restaurants added 176,000 while arts, entertainment and recreation contributed 64,000 to the total. Even with the continued gains, the sector remains 3.1 million below its pre-pandemic total in February 2020. With students heading back into schools, education hiring boomed during the month as well. Local, state and private education institutions combined to hire 190,000 more employees for the month. Construction also saw a healthy gain of 110,000 new jobs, while professional and business services added 66,000 and manufacturing increased by 53,000.

 

     Job changes


Auto Makers have strong 2021 strong despite supply glitches. The industry’s sales pace is approaching prepandemic levels, but shortages in semiconductors and other crucial parts are curtailing production.

    Auto sales

 

Filings for U.S. unemployment benefits rose last week but remained near their lowest levels since the pandemic’s onset. Initial jobless claims, a proxy for layoffs, remain well above pre-pandemic levels but have trended downward since the start of the year.

 

     UBR

 

Market perspectives:

 

     • CME raises soybean futures maintenance margins. Maintenance margins for CBOT soybean futures will rise to $3,350 per contract, up 11.7% from the current $3,000, for May 2021, the CME Group announced Thursday. The rates will be effective after the close of business April 5.


     • OPEC and an alliance of other top oil producers agreed to boost their collective production by more than two million barrels a day over coming months, betting on resurgent demand as the pandemic recedes. OPEC and its allies agreed to increase their overall oil production by 350,000 barrels per day in both May and June, followed by another 450,000 bpd in July. Separately, Saudi Arabia decided to relax its unilateral cuts of 1 million bpd gradually and plans to phase them out entirely by the end of July.

 

        OPEC
 

     As investors rush to buy U.S. assets, they have driven U.S. Treasury bond yields sharply higher this year. Should that continue, economists worry that the higher returns could pull money from emerging markets.

 

        Yield

 

     • Copper prices have fallen about 7% from a near-decade high hit in late February, even as the Biden administration pledges to pump trillions of dollars into the economy. Most actively traded copper futures edged down 0.1% to $3.99 a pound on Thursday, bringing their slide for the week to roughly 2%. Hedge funds and other speculative investors have lowered net bets on higher copper prices, cutting them by nearly 50% in the five weeks ending March 23, Commodity Futures Trading Commission data show.

        Copper prices


POLICY FOCUS


 

—  Graphical look at Biden’s $2.25 trillion ‘infrastructure’ proposals. President Joe Biden calls the proposal "a once-in-a-generation investment in America." The plan, which would be funded by higher corporate taxes, would see the largest chunk of funds go to transportation, including money to upgrade roads, incentivize consumers to buy electric cars and create a nationwide network of 500,000 electric vehicle charging stations.

 

     IPLAN

     Biden has tapped members of his Cabinet to sell his infrastructure and jobs plan to Congress and the American people. But the Senate’s top Republican, Mitch McConnell of Kentucky, still doesn’t see Biden’s effort attracting any support from the GOP. Biden said he had directed five of his Cabinet members including Transportation Secretary Pete Buttigieg and Energy Secretary Jennifer Granholm.  Commerce Secretary Gina Raimondo, Housing and Urban Development Secretary Marcia Fudge and Labor Secretary Marty Walsh would round out the group, Biden said Thursday during his first Cabinet meeting at the White House.

 

— NGFA sends letter cautioning against funding mechanisms for surface transportation legislation that would disproportionately place a burden on freight transportation. The National Grain & Feed Assn. (NGFA) sent a March 29 letter (link) to leaders of the Senate Finance Committee. The letter was sent to the Senate Finance Committee and was signed by nearly 100 agricultural organizations. It suggested broad-based funding mechanisms to ensure all beneficiaries contribute to upgrading and maintaining roads and bridges. NGFA and the other groups sent the letter in response to discussions among Senate lawmakers supporting a truck-only vehicle miles tax. “As you work to advance a surface transportation reauthorization bill, our organizations urge you to create a legislative package that includes funding supported by all road users,” the letter stated. “For our respective agricultural organizations, a truck-only vehicle miles tax would increase truck transportation costs, leading to lower farmgate prices and reduced market share for U.S. agriculture versus our foreign competitors.”

 

     U.S. Transportation Secretary Pete Buttigieg said this week that the administration has no plans to raise the federal gas tax or create a vehicle miles fee to pay for the $2 trillion infrastructure plan that President Biden proposed on March 31.

 

— Legislative proposal would bar racial favoritism for USDA programs. Rep. Burgess Owens (R-Utah) and Rep. Tom Tiffany (R-Wis.) announced on Thursday introduce the Agriculture Civil Rights and Equality Act (ACRE Act), which would prohibit officials at USDA from discriminating or providing preferential treatment to any person based on race, color, national origin or sex. The prohibitions would apply to USDA hiring, contracting, and programming, including programs administered by states, territories, and universities using USDA funds.

 

     Owens comments: The bill comes after President Biden signed “a massive, partisan $1.9 trillion spending package into law that includes a $5 billion agriculture debt relief program earmarked exclusively for non-white farmers,” Rep. Owens said in a release. “Farmers from all walks of life face tremendous challenges, especially as their industry navigates a post-pandemic economy. I’m deeply concerned that Congress feels emboldened to perpetuate a modern-day form of racial segregation rather than provide relief to those who need it most,” said Owens. “My grandfather, a respected farmer in the 1950s and ‘60s Black middle class, would be horrified by any policy that seeks to discriminate based on race. Racism was and will always be wrong.”

 

     “It’s one thing to gear relief programs to farmers who have fallen on hard times and are struggling to make ends meet,” said Rep. Tiffany. “But it is fundamentally unfair for the government to treat farmers differently based on immutable characteristics. To extend assistance to some farmers but not others based on race undermines the constitution’s guarantee of equal protection for all Americans,” Tiffany concluded. “If we are serious about ending discrimination in the agriculture sector, the first step is for the government to stop doing the discriminating.”
 


ENERGY & CLIMATE CHANGE


 

— Eight states file amicus brief urging Supreme Court to uphold SRE ruling. Eight states have jointly filed an amicus brief that urges the U.S.Supreme Court to uphold the Tenth Circuit Court of Appeals decision on small refinery exemptions (SREs). The court ruled that three SREs granted for the 2016 compliance year were invalid as they did not constitute continuous requests. The affected refineries have appealed the matter to the nation’s top court which will hear the matter April 27.

 

     Details: Attorneys General for Iowa, Nebraska, Illinois, Michigan, Minnesota, Oregon, South Dakota and Virginia signed the brief which said that “authorizing the unfettered granting” of SREs would “gut” the Renewable Fuel Standard (RFS) and the broader interpretation of the SRE authority sought by refiners would “cause substantial economic harm to the rural economies of many states.”

 

     Background: The biofuels sector “and the rural economies that they anchor” have grown the past 16 years on the premise that the RFS mandates would be met.  Recognizing that “the renewable fuel and agriculture industries are the cornerstone of the economies of many states,” the states urge in the brief that “the judgment of the court of appeals should be affirmed.” EPA announced in February that it now backs the Tenth Circuit Court of Appeals decision. But the agency also has said that it will not make any decisions on the pending SREs until after the Supreme Court has issued its decision which is not expected to come until potentially this fall.

 

— House Democrats introduce carbon pricing measure. Four House Democrats on Thursday reintroduced legislation to establish a carbon pricing system in the U.S. The bill would price carbon at $15 per metric ton of carbon dioxide equivalent, with the price increasing $10 a year. The measure's sponsors wrote that it would reduce carbon pollution by as much as 45% by 2030 and net zero by 2050.

 


CORONAVIRUS UPDATE


 

 Summary: Newly reported Covid-19 cases and deaths remain elevated in the U.S. and have risen higher this week, even as states begin to expand vaccine eligibility to more residents.
 

     Sources: Johns Hopkins University as of 6:30 a.m. ET; Vaccination figures from the Centers for Disease Control and Prevention.

  • 153,631,404: Vaccine doses given so far in the U.S.
  • 79,029: New U.S. cases recorded yesterday
  • 1,065: Deaths in the U.S. recorded yesterday
  • 553,138: Total U.S. deaths
  • 30,539,760: Total confirmed cases in the U.S.
  • 129,689,655: Confirmed cases world-wide, and 2,829,457 deaths

— FDA authorizes first at-home rapid Covid-19 tests. After nearly a year of calls by some U.S. public-health authorities for rapid Covid-19 tests to help quickly screen people without symptoms, the FDA has given the green light for three such tests. They are called "serial tests" and are meant to be taken multiple times because the kits are generally less precise than lab tests. Frequent at-home testing can capture an infection that might have been missed with a test just a day or two earlier. Abbott Laboratories, one of the companies approved to sell the tests, plans to distribute them in packs of two and hopes they will be on shelves within weeks.

 

— White House confident J&J will meet vaccine targets, despite a setback at a Baltimore site, White House Press Secretary Jen Psaki said. Psaki spoke at the White House after J&J and one of its subcontractors, Emergent BioSolutions, acknowledged that a batch of drug substance had been spoiled. She said the U.S. doesn’t expect J&J to miss any delivery targets and alluded to having some room with a larger supply of Pfizer and Moderna. The U.S. has said it will have enough vaccine doses for all American adults in May from those companies.

 


POLITICS & ELECTIONS


 

— Ryan announces $1.2 million raised in first quarter as he eyes Ohio Senate run. The Cleveland Plain Dealer reports (link) Rep. Tim Ryan (D-Ohio) reported raising more than $1 million in the first quarter of 2021, a significant boost over his previous fundraising as he openly mulls a bid for Senate. Ryan’s campaign said he raised $1.2 million in the first three months of 2021 and currently has $1 million in the bank. Of those donations, 88% were from small-dollar donors of $200 or less.
 


OTHER ITEMS OF NOTE     


 

— Iran nuclear deal participants to meet next week. Senior officials from all participants in the accord will gather in the Austrian capital, but there will be no direct discussions for now between U.S. and Iranian officials, diplomats said, according to the Wall Street Journal. The discussion, which will involve officials from Iran, Russia, China, Germany, France and the U.K., will be chaired by the EU’s top foreign envoy Josep Borrell and address how the landmark agreement can be fully implemented by all sides, according to a statement.

 

— Labor Department seeking H-1B wages input. The U.S. Labor Department is asking the public to weigh in on the best methodology and data to use in updating minimum wage requirements for specialty occupation visa holders. The request for information is the latest in a series of actions the Biden administration has taken to delay and potentially revise a final H-1B wage rule issued at the eleventh hour by the Trump administration. Opponents of the Trump prevailing wages rule said the increases were too high and didn’t correspond to the market pay. The rule’s effective date has been delayed until November 2022.

 

— State Dept. to resume work on visa processing. The State Department said it will resume processing H-1B and other guestworker visas that were banned under a Trump administration proclamation issued last June. Presidential proclamation 10052 quietly expired, making the State Department’s announcement the first official acknowledgment by the Biden administration that those restrictions have ended.

 

— FEMA released changes to the National Flood Insurance Program that will calculate insurance premiums based on home value and flood risk, potentially charging more to those with more expensive homes. The agency said this represents an attempt at improving equity - given that at present those with lower-valued homes are "paying more than their share of the risk" - and will likely decrease premiums for 23% of policyholders while increasing premiums by up to $10 for 66% of policyholders and by moderately more for the remaining share. Link to details via The Hill.

 

— A million illegal immigrants expected to cross border in 2021: official. A Border Patrol official estimated that more than 1 million illegal immigrants are expected to arrive at the U.S.-Mexico border in 2021 as the White House grapples with how to find facilities and process them. “We’re already starting to see some higher days of 6,000-plus apprehensions,” Raul Ortiz, deputy chief of the U.S. Border Patrol, told reporters. “So, I fully expect our border patrol agents to encounter over a million people this year.” Border Patrol apprehended approximately 100,000 illegal immigrants in February, which is the highest number since February 2019, Ortiz said. He noted that people try to illegally cross into the U.S. between April and June.

 

— Cotton AWP falls another week. The Adjusted World Price (AWP) for cotton will be 65.59 cents per pound effective today (April 2), down from 68.55 cents per pound the prior week. This is the lowest AWP since it was at 65.25 cents per pound the week of Jan. 8. Meanwhile, USDA said that Special Import Quota #24 would be established April 8 for 38,619 bales of Upland Cotton, applying to supplies purchased not later than July 6 and entered into the U.S. not later than Oct. 4.

 


 

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