Data Update: Why the muted reaction to US Jobs numbers (so far)?

Friday 4th March 2016

Data Update: Why the muted reaction to US Jobs numbers (so far)?

ref :- General

The US employment data for February has just been released, and at first glance they're impressive. Non-Farm Payrolls came in at +242,000, right at the very top of the range of forecasts and a lot stronger than the consensus estimate of +190,000. In addition, the January figure was revised from +151,000 to +172,000. By any measure, that's pretty strong. The dollar was immediately marked stronger, and bond yields are higher too (and therefore prices lower) .... but not much, not yet anyway.

The reason for the measured response is the Average Hourly Earnings figure, which was expected to show a rise of +0.2% but came in at minus 0.1%..... which basically suggests that while the US economy is showing genuine resilience in the face of those "global headwinds", not everybody in the States is benefitting from it. More to the point the upward pressure on wages (and by extension therefore on inflation) that one would normally associate with a tightening labour market is stubbornly refusing to show itself. For the record, the headline Unemployment rate was unchanged at 4.9%.

We were musing yesterday about what a strong payrolls number might do .... and how it might affect the prevalent pessimism of the markets and the prospects for US rates. We understand completely about the lack of inflationary impetus suggested by the Earnings figure, but can't escape the feeling that on balance this kind of data taken as a whole brings the next rate hike marginally nearer rather than more distant, whenever your expectations of when that will happen might be.

We'll know if the market thinks that way by Monday, or will the data be viewed as the genuine mixed bag some commentators are saying it is.