News of the week summary - 05/04/2026
The March jobs report delivers a strong surprise
The Bureau of Labor Statistics reported on Friday that the US economy added 178,000 jobs in March, a result that was roughly three times higher than the consensus forecast of 59,000 and that represented the strongest single monthly gain since the first quarter of 2025. The rebound followed a sharp contraction in February, when 133,000 jobs were lost as a 43-day government shutdown depressed federal employment and created cascading effects across sectors that rely on government contracts and spending. March reversed much of that: federal government employment fell a further 18,000 as headcount reductions continued, but growth elsewhere more than offset the decline. Healthcare led with 76,000 new positions; construction added 26,000 as the sector absorbed a backlog of deferred projects; transportation and warehousing contributed 21,000.
The unemployment rate ticked down to 4.3 percent from 4.4 percent in February, though the decline partly reflected a drop in labour force participation rather than an increase in employment. Average hourly earnings rose 0.2 percent for the month and 3.5 percent over the prior year, the lowest annual wage growth rate since May 2021. For the Federal Reserve, the deceleration in wages was at least as significant as the headline payroll figure: if wage growth continues to moderate, it reduces one of the main channels through which an energy price shock could translate into sustained broad inflation. The jobs report would not significantly change the Fed's near-term posture, but it provided useful evidence that the economy had absorbed the shutdown's effects and entered the conflict from a position of reasonable underlying resilience.
What the report could not yet show was the war's direct effect on employment. The data collection period for the March report largely predates the most acute phase of the conflict. The April and May reports would be the first to capture any tightening in hiring decisions, any shift in labour demand, or any second-round effects of higher energy and transportation costs on payrolls across the economy. For now, the March data established the baseline: a labour market that was neither booming nor breaking, and that would need to hold together through a period of significant external pressure.
Two food megadeals push Q1 M&A to a global record
A day before the jobs report, two deals announced within 24 hours of each other made Q1 2026 the busiest opening quarter for large corporate transactions in history. McCormick, the Maryland-based condiments and spices group, agreed to acquire Unilever's global food business, which includes brands such as Hellmann's and Knorr, for approximately $44.8 billion. The deal, structured as a combination in which Unilever shareholders would receive a 65 percent stake in the merged entity alongside $15.7 billion in cash, values the combined business at around $65 billion and nearly doubles McCormick's scale. Within the same 24-hour window, Sysco, the US food distribution giant, agreed to acquire Jetro Restaurant Depot, a cash-and-carry wholesaler with 166 warehouse locations across 35 states, for $29 billion.
The two deals broke into the global top ten largest transactions of the quarter simultaneously, something no pair of US consumer deals had managed since 2015. Their emergence reflected a particular moment in the packaged food and food distribution industries. Unilever had been narrowing its portfolio for several years, selling or separating food assets as it concentrated on personal care, beauty and wellbeing, where its margins and growth prospects were stronger. McCormick's move was years in the making and gives the company global scale in flavours and condiments at a time when its existing portfolio faces pressure from shifting consumer tastes and the need to compete across more markets. Sysco's acquisition of Jetro adds a warehouse distribution model that serves more price-sensitive independent restaurants, diversifying away from a delivery-heavy structure that is under increasing margin pressure.
Taken together, global M&A reached an estimated $1.3 to $1.6 trillion in the first quarter, depending on the measure, representing a 50 percent year-on-year increase and the highest quarterly total on record. The volume included 22 deals valued at above $10 billion globally, surpassing the previous record of 21 such deals set in the fourth quarter of 2015. The resilience of deal-making at a time when public market valuations were under pressure from the energy shock and oil was above $100 a barrel pointed to a corporate sector that was focused on strategic positioning over a multi-year horizon rather than reacting to near-term volatility.
Powell reinforces patience, as the Fed holds its ground
In public remarks during the week, Federal Reserve Chair Jerome Powell reiterated the position the Fed had taken since the conflict began: there was no need to raise interest rates at this time, even with energy prices elevated and headline inflation likely to move higher. The reasoning rested on a distinction between the kind of inflation the Fed can address and the kind it cannot. Higher petrol prices caused by a supply disruption in the Middle East do not respond to higher interest rates in Washington. Rates affect demand, not supply. Raising borrowing costs would slow economic activity and reduce spending, but it would not reopen the Strait of Hormuz or restore the flow of oil through the Gulf. The appropriate response to a temporary energy shock, in the Fed's view, was to monitor whether it was feeding through into broader price pressures, particularly in wages and services, and to act only if those second-round effects materialised at scale.
The distinction mattered for financial markets because it implied a relatively patient response even as CPI was expected to rise sharply in the March report, due the following week. Futures markets at the end of the week were pricing virtually no probability of a move at the April 28-29 FOMC meeting, and about a 22 percent probability that rates would be raised at some point before the end of 2026, a figure that reflected concern but not conviction. That balance of probabilities was producing an unusual situation in financial markets: stocks and bonds were both under pressure simultaneously, as higher inflation expectations pushed bond yields higher while the economic uncertainty from the war weighed on equities. The 60/40 portfolio, which blends equity and fixed income exposure and relies on the two asset classes moving in opposite directions, had produced negative returns in both components through most of March, its second-worst monthly performance since September 2022.
Oil itself was trading around $100 to $110 a barrel for Brent through the week, down from its March peak of nearly $120 but still some 50 percent above pre-conflict levels. Diplomatic signals moved prices daily: a statement suggesting Iran and the US were in contact sent oil lower; a statement suggesting talks had stalled or that strikes continued sent it higher. The S&P 500 had fallen close to correction territory by the end of March, meaning a decline of roughly 10 percent from its January highs, before stabilising as the jobs report lifted sentiment on Friday.
Manufacturing holds its recent recovery
A quieter piece of data released earlier in the week confirmed that the industrial side of the US economy had entered the conflict period from a position of modest strength. The Institute for Supply Management's manufacturing index registered 52.7 percent for March, above the 50 threshold that separates expansion from contraction for the third consecutive month. The services index came in at 54.0 percent, the 21st consecutive reading above 50. Both figures were consistent with an economy that was growing at a moderate pace before the conflict's disruptions had time to work through to business orders, production decisions and hiring plans.
The ISM data is a survey-based measure, and it captures conditions as they existed when businesses responded to the questionnaire, which largely predates the acute phase of the shock. It is therefore best read as a baseline confirmation rather than a current signal. What it confirmed was that the expansion that had been taking hold in manufacturing through late 2025 and early 2026, driven partly by AI infrastructure investment and a recovery in demand for semiconductors and electronics, was still intact at the moment the conflict began. Whether it would remain so through April and May would depend on how thoroughly higher energy and freight costs penetrated supply chains and how much corporate caution restrained new orders.