Strong US job report but economy could still slow, as could Japan's

If the US economy is slowing, it is not showing up in the March employment report. From Bloomberg:

American employers added more workers than forecast in March and the jobless rate matched a five-year low, giving the economy a spark as it struggles to overcome slumps in housing and manufacturing.

The 180,000 increase in employment, the most in three months, followed a 113,000 gain in February that was larger than previously estimated, the Labor Department reported today in Washington. The jobless rate fell to 4.4 percent, a level last seen in October, defying predictions it would climb...

Revisions for the prior two months showed employers added 32,000 more jobs than earlier estimated.

Workers' average hourly earnings rose 6 cents, or 0.3 percent, after a 0.4 percent increase the previous month... Earnings were up 4 percent from March last year.

There was more good news.

Separately, the Commerce Department reported that sales at U.S. wholesalers outpaced inventories in February, which may lay the groundwork for a manufacturing rebound in coming months.

The 1.2 percent increase in sales followed a 0.9 percent decline a month earlier. Stockpiles of unsold goods rose 0.5 percent. Wholesalers make up about a quarter of all business inventories...

Meanwhile, Reuters reports that consumer credit growth slowed in February.

U.S. consumer credit rose $2.97 billion in February on a pick-up in credit card usage, which made up for a sharp slowdown in growth of closed-end consumer loans for cars, holidays and other big-ticket items, a Federal Reserve report showed on Friday.

Consumer credit rose at a 1.5 percent annual rate in February to $2.410 trillion, following an upwardly revised January increase of 3.3 percent, or $6.61 billion.

Nevertheless, the strong job report points to sustained inflation pressures, as does the Economic Cycle Research Institute's inflation gauge, as Reuters reports:

The Economic Cycle Research Institute's U.S. Future Inflation Gauge, which is designed to anticipate cyclical swings in the rate of inflation, rose to 118.6 in March from 118.5 in February, revised down from 118.7.

On the other hand, the ECRI's leading indicator eased last week.

The Economic Cycle Research Institute, an independent forecasting group, said its Weekly Leading Index inched down to 140.3 in the week to March 30 from a revised 140.5 in the prior week.

That is in line with other forecasts. From Reuters:

The International Monetary Fund has revised down its forecast for U.S. economic growth by 0.4 percentage points, a German newspaper reported in its online edition on Friday.

A report from the Organisation for Economic Cooperation and Development also pointed to a slowdown in the world's largest economy, and signaled a weaker outlook for G7 economies as a whole...

In a report released in Paris, the OECD said its composite leading indicator (CLI) for the United States declined to 106.1 in February from 106.4 the previous month.

"February 2007 data show weakening performance in the CLI's six month rate of change in most of the major seven economies (G7)," the OECD said.

However, the CLI figure for the 30-nation OECD area came in at 109.5, unchanged from January.

Japan may also not be able to escape a slowdown. Reuters reports:

Japan's diffusion index of leading indicators, a barometer of the economy, dipped below a key threshold in February for the fourth straight month, casting doubt over the strength of the economic recovery.

The government also downgraded its view on the current state of the economy for the first time in nearly two years, saying underlying economic conditions are weakening and warrant close monitoring.

The leading index, which gauges conditions several months ahead, fell to a preliminary 30.0 in February from 40.9 in January, government data showed on Friday.