(Reuters) - A top Federal Reserve official downplayed the meager March jobs report, arguing he still expects unemployment to tick down to about 7 percent by year’s end and suggesting the economy is not entering another spring “swoon.”
St. Louis Fed President James Bullard pointed to a stronger Europe and more positive economic data beyond the employment report, which last week showed only 88,000 jobs were created last month in the United States.
However, Bullard, speaking on CNBC on Tuesday, added he was concerned that the drop in the unemployment rate to 7.6 percent, from 7.7 percent the previous month, was due to fewer Americans hunting for work.
“It’s not changing my outlook so far. I‘m inclined to look past the report because I think there are some mixed messages in there,” including stronger average job growth over the last six months.
“This is a down number, but we’ll see,” he said. “I don’t think we have enough evidence right now to say there’s any kind of a swoon going on.”
The Fed has tied the duration of its bond buying program to a “substantial improvement” in the labor market and plans to keep interest rates near zero until the unemployment rate falls to about 6.5 percent.
Investors are anxiously predicting when the central bank will taper or end its monthly purchases of $85 billion in bonds.
“Surely if we get into the low sevens (unemployment rate) everyone will say there’s substantial improvement in the labor market,” Bullard said.
Reporting by Jonathan Spicer Editing by W Simon and Kenneth Barry