No fireworks after US Jobs data ......

Friday 1st April 2016

No fireworks after US Jobs data ......

ref :- "Payrolls in US Increased 215,000 in March as Wages Picked Up" , Bloomberg Markets

Since the Fed has recently reminded us that policy decisions will be "data-dependent" ( weren't they always?), even more attention will be focussed on every statistical release in the hope of getting an insight into the future. The trouble with that, is that often too much significance might be attached to relatively unimportant or erratic data, and the resulting knee-jerk market reactions are not helpful and occasionally costly. Still, nobody would categorise the Employment Report just released as anything but important so here are the numbers:

March Non-Farm Payrolls:           +215,000 (consensus forecast +210,000)

March Unemployment Rate:           5.0% (consensus forecast 4.9%)

March Average Hourly Earnings:  + 0.3% m-on-m (consensus forecast +0.2)

As you can see, it was all broadly in line with expectations. The NFP and Ave Hourly Earning were fractionally on the strong side, but  a fall of 29,000 manufacturing jobs points to continuing problems in that sector. The rise in the headline unemployment rate may attract attention as it's the first in quite a while, but can be explained by a jump in people entering the workforce. All in all, pretty solid data ..... the early market reaction was for US Treasury yields to rise a few basis points and we also saw small gains for the dollar, but as we write we're pretty much back to where we were before. Something of a non-event, then? Well, in one sense perhaps but these days little reaction to important data is an event in itself.

Actually, in all probability a sharp market reaction would only have occurred had the report been considerably weaker than expected (bond yields down / prices up, dollar down). Had they been a fair bit stronger than forecast, it's likely that the cautious approach to rate hikes advocated once more by Fed Chair Yellen this week would have kept a lid on any silly market moves.

That said, it's interesting that quite a few of the immediate commentaries emphasize the fact the US continues to be largely unaffected by the much-quoted "global headwinds". That's true ..... SO FAR, and one could point out that it's possible that the global headwinds could turn into something much more damaging to the US economy if the pace of rate hikes was quickened. But without doubt, Ms Yellen's comparatively doveish new stance is not unanimous in the US, and probably not even on the board of the Federal Reserve. If the numbers remain strong, it'll be fascinating to see how long it will be before the hawks start getting noisy again.