Established in 1974
185,800 clients worldwide
Over 15,000 markets

The jobs report numbers were good but not great

The headline non-farm payrolls figures were a pleasant surprise, but the wage growth numbers took the shine off the report.

Wall Street sign
Source: Bloomberg

In February, the US added 242,000 jobs which compares with 195,000 expected. An added bonus was the upward revision of 21,000 jobs to the previous month’s number. The unemployment rate held steady at 4.9%, meeting estimates. On the face of it, the report was very positive, but the average hourly earnings were mediocre.

On a month-on-month basis the average hourly earnings declined by 0.1% and on a year-on-year basis it rose by 2.2%. Investors were expecting 0.2% and 2.5% respectively. Wage growth is an indicator that Janet Yellen has expressed major interest in and today’s numbers were underwhelming. In typical non-farm payrolls fashion the market latched on to the headline number and then reversed its initial move after it digested the full report.

Indices jumped at first as traders welcomed the good news and when the earnings numbers sunk in they gave up their gains and are broadly speaking trading below their pre-announcement levels. The dollar had a similar experience to that of the equity markets, and currency is softer on the back of the report after the market realised the numbers were not as hawkish as initially thought. Gold initially lost a lot of ground once the numbers were posted but it is quickly moving higher as traders have cottoned on the report was more dovish than initially thought. 

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.