U.S. equities snapped higher following the solid payrolls print tempered somewhat by cooler hourly earnings, which came hot on the heels of an apparent agreement for the leaders of N. Korea and the U.S. to meet for a round of nuclear detente golf. Both of these events followed the confirmation of steel and aluminum tariffs (with possible exemptions), which are seen as a net negative for global growth overall. The dollar rallied against the yen following the jobs report which revealed a large 313k NFP print, though hourly earnings were light of expectations. EURUSD initially fell from 1.2285 to 1.2273, before trading over 1.2300, while USDJPY ramped up to 107.04 from 106.20. Equity futures rallied, indicating solid gains at the Wall Street open. The USA500 index future flipped into mildly positive territory after seeing a slight decline going into the data.
U.S. nonfarm payrolls surged 313 in February after gains of 239k in January (revised from 200k) and 175k in December (revised from 160k) for a net 54k upward revision. Average hourly earnings were up 0.1% after a 0.3% increase previously, which brought the 12-month pace to 2.6% y/y (sa) from a revised 2.8% y/y (was 2.9% y/y). The unemployment rate was steady at 4.1% for a 5th straight month. The labor force increased 806k, the most since the early 80s, after January’s 518k climb, with household employment 785k higher following the prior 409k gain. The labor force participation rate rose to 63.0% from 62.7%. Private payrolls were up 287k (ADP was up 235k). The goods producing sector added 100k jobs, while construction added 61k. Manufacturing payrolls increased 31k. The service sector added 187k with trade/transport up 72k and business services up 50k. Government employment was up 26k, with the Federal shedding 7k. This is a great report, quite goldilocks, with employment climbing and little wage/inflation pressure showing through. That should keep the FOMC on a GRADUAL course for now.
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