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Another strong jobs report from the Bureau of Labor Statistics (BLS) survey — a monthly read of non-farm payroll numbers, including government hiring — has been released before the bell today: 235K new jobs were created in the month of February, continuing the strong labor market we’ve seen for nearly the entire past year. The headline unemployment rate fell 10 basis points to 4.7%.
Let’s break this down in a moment, but the impact should be clear right away here: there’s nothing stopping Fed Chair Janet Yellen & Co. from raising interest rates a quarter point at the next FOMC meeting next week. Prior to Wednesday’s ADP (ADP - Free Report) private-sector jobs report — which has been corroborated this morning with an in-league BLS number, in general — chances of a rate hike according to analysts was just north of 80%, and there’s nothing in the way of this figure going higher until the Fed’s announcement next Wednesday afternoon.
In short, expect the market to further bake a rate hike into the market cake today.
One big element analysts consider when looking at comprehensive jobs reports like these is the Average Hourly Employment, which gauges not just overall employment numbers, but the quality of employment workers have (higher AHE rates mean stronger labor in general). For February, the Average Hourly Earnings ticked up another 0.2%, and is up 2.8% year over year. So not only are new jobs being added to the U.S. economy, but those jobs are starting to pay more, as well.
As we saw in the ADP numbers earlier this week, Construction and Manufacturing posted a notable amount of the monthly jobs gains: 58K and 28K, respectively. The private sector overall posted 227K new jobs — down from the gaudy 298K we saw in the ADP report, but healthy nevertheless. The U6 (“real unemployment”) read is 9.2% — still nearly twice the headline unemployment figure but still way down from this early point in the Obama administration 8 years ago. The BLS survey counts 340K new people entering the U.S. workforce.
Speaking of presidential administrations, it’s probably too soon to credit this impressive jobs growth to the fledgling Trump administration — after all, February’s jobs number is very consistent with the past several months under President Obama — although improvements in things like Construction (58K is the highest read for this sector in nearly a decade) and the promises of corporate tax cuts, deregulation, infrastructure programs, etc. that Trump has promised should be considered an important factor in the positive outlook of especially small businesses, in that the economic climate appears to favor more blue collar workers in the labor force.
Much of this is for us to unpack down the road a bit. For now, look to jobs market strength as an even stronger indicator that we’ll see interest rates bump up to the 75-100 basis points range by mid-next week. And check the over-under odds of three rate hikes anticipated for 2017, based on the language the Fed uses in presenting their decision.
Image: Bigstock
235K New Jobs Remove Last Stop from Fed Rate Hike
Friday, March 10, 2017
Another strong jobs report from the Bureau of Labor Statistics (BLS) survey — a monthly read of non-farm payroll numbers, including government hiring — has been released before the bell today: 235K new jobs were created in the month of February, continuing the strong labor market we’ve seen for nearly the entire past year. The headline unemployment rate fell 10 basis points to 4.7%.
Let’s break this down in a moment, but the impact should be clear right away here: there’s nothing stopping Fed Chair Janet Yellen & Co. from raising interest rates a quarter point at the next FOMC meeting next week. Prior to Wednesday’s ADP (ADP - Free Report) private-sector jobs report — which has been corroborated this morning with an in-league BLS number, in general — chances of a rate hike according to analysts was just north of 80%, and there’s nothing in the way of this figure going higher until the Fed’s announcement next Wednesday afternoon.
In short, expect the market to further bake a rate hike into the market cake today.
One big element analysts consider when looking at comprehensive jobs reports like these is the Average Hourly Employment, which gauges not just overall employment numbers, but the quality of employment workers have (higher AHE rates mean stronger labor in general). For February, the Average Hourly Earnings ticked up another 0.2%, and is up 2.8% year over year. So not only are new jobs being added to the U.S. economy, but those jobs are starting to pay more, as well.
As we saw in the ADP numbers earlier this week, Construction and Manufacturing posted a notable amount of the monthly jobs gains: 58K and 28K, respectively. The private sector overall posted 227K new jobs — down from the gaudy 298K we saw in the ADP report, but healthy nevertheless. The U6 (“real unemployment”) read is 9.2% — still nearly twice the headline unemployment figure but still way down from this early point in the Obama administration 8 years ago. The BLS survey counts 340K new people entering the U.S. workforce.
Speaking of presidential administrations, it’s probably too soon to credit this impressive jobs growth to the fledgling Trump administration — after all, February’s jobs number is very consistent with the past several months under President Obama — although improvements in things like Construction (58K is the highest read for this sector in nearly a decade) and the promises of corporate tax cuts, deregulation, infrastructure programs, etc. that Trump has promised should be considered an important factor in the positive outlook of especially small businesses, in that the economic climate appears to favor more blue collar workers in the labor force.
Much of this is for us to unpack down the road a bit. For now, look to jobs market strength as an even stronger indicator that we’ll see interest rates bump up to the 75-100 basis points range by mid-next week. And check the over-under odds of three rate hikes anticipated for 2017, based on the language the Fed uses in presenting their decision.
Mark Vickery
Senior Editor
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