Labour market stalls

The modest 120,000 increase in non-farm payroll employment in March, half the pace of job creation in February, prompted fears that the recovery could be faltering again. The rise in weekly initial jobless claims has only added to those fears. Some of the recent news on spending has been more upbeat, however, and our estimates now suggest that first-quarter GDP growth was a healthy 2.5% annualised. We don't anticipate another collapse in growth like we saw in 2011. The economy was rocked last year by rapid commodity price rises and supply shortages. Admittedly, gasoline prices have increased this year as well, but the gains have been more modest and are already going into reverse, while the prices of other commodities have remained steady.