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. 

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