Question

Looking at the February jobs report, was it a positive one or negative one? How does it relate to reports in the past couple months? What does it say about the state of the labor market and the economy as a whole? Make sure to mention the number of jobs created and the unemployment rate.

https://www.bls.gov/news.release/empsit.nr0.htm <job report for February

Answer 1

In theory, wages are more important than job gains at this point in the economic cycle and the US Dollar is indeed slightly weaker. However, the falls are small and trading is choppy. What is going on? While wages are very important, the gain in jobs is huge. When coupled with a rise in the working week to 34.5 hours, better than expected, things do not look that bad, at least for stocks. More Americans are working longer hours but at lower pay.

Post-NFP: slack in the economy may take longer to sort out

The focus of the market will remain on the global economy after Friday’s release of US jobs data smashed expectations as employment grew by a solid 313 thousand, which was the strongest showing in 18 months. Average hourly earnings however grew only modestly, up 0.1% month-over-month. But this was excellent news for equities as it helped to keep the prospects of even quicker rate rises in check...

US jobs report post-release checklist – March 9th, 2018

NFP Actual, Consensus and Deviation	Positive	313k versus 200k expected (deviation +2.07).
NFP Revisions	Positive	Revised upwards from 200k to 239k.
Unemployment Rate	Neutral	4.1%. It failed to improve although it was expected to drop slightly (4.0%)
Labor Force Participation Rate	Positive	Increases to 63.0% from 62.7% equal last month surprising the expectations at 62.8%
Average Hourly Earnings	Negative	0.1% decrease versus 0.2% expected

  

Unemployment Rate

• n/a Actual
• n/a Consensus
• 4.1% Previous

Average Hourly Earnings (MoM)

• n/a Actual
• n/a Consensus
• 0.1% Previous

During the previous U.S. Employment Report release, even the minimum average spreads went as high as 1, or even more. Some brokers simply "stepped aside" and quoted a 10+ pips spread. Also spreads recover relatively fast to normal levels when compared to earlier NFP events.

US jobs report pre-release checklist – March 9th, 2018

Previous Non-Farm Payrolls	Positive	200k versus 180k expected, but with little surprise (deviation was 0.41).
Challenger Job Cuts	Positive	The number of corporate layoffs fell in February from 44.6k down to 35.4k
Initial Jobless Claims	Negative	The first-time claims for unemployment ticked up last week, with the 231k headline number overcoming the 220k expectations and also last week's figure (210k)
Continuing Jobless Claims	Positive	The number of individuals currently receiving unemployment benefits last week diminished from 1.934M to 1.870M, better than the 1.921M expected.
ISM Non-Manufacturing PMI	Negative	The Employment Index registered 55%, which reflects a decrease of 6.6 percentage points when compared to the Jan reading of 61.6%.
ISM Manufacturing PMI	Positive	The Employment Index registered 59.7% in Feb, an increase of 5.5 percentage points when compared to the Jan reading of 54.2%.
University of Michigan Consumer Confidence Index	Positive	The Index increased in Feb, standing now at 130.8 (1985=100), up from 124.3 in Jan.
Conference Board Consumer Confidence Index	Positive	The Index increased in January, following a decline in December, 125.4 up from 123.1.
ADP Employment Report	Positive	ADP Employment Change for Feb came better than expected at 235K vs. consensus (195K). Prior release was revised up from 234K to 244K.
JOLTS Job Openings	Negative	The number of job openings droped to 5.811 million.

Friday marks the first monthly jobs report of the Trump presidency, and there are a few reasons to think it'll be good.

Total nonfarm employment is expected to increase by 175,000, according to Reuters. Company executives could be hiring in anticipation of a business-friendly environment under the new administration. The economy had also been heating up under former President Obama and added over 14 million jobs since bottoming out in January 2010.

The country has added a monthly average of 204,000 nonfarm payroll jobs over the past two years, according to data from the Bureau of Labor Statistics.

Positive private payrolls

Market observers' hopes for a solid month of job growth were buoyed Wednesday when payroll processor ADP reported 246,000 new workers added to private payrolls in January, beating economists' expectations significantly. A particularly positive note in the report was that goods-producing companies showed life, hiring 46,000 workers, the biggest increase in two years.

ADP's report was a positive sign, but it's no guarantee that the BLS will have similar numbers. The two reports employ different methodology and, as CNBC reported in October, the ADP report often differs from the BLS' measure of private nonfarm jobs. Half the time, the difference is greater than 40,000 jobs.

Measuring wages

Economists polled by Reuters expect the official unemployment rate remained at 4.7 percent in January. But a slight increase in the unemployment rate isn't always a bad thing. Because the unemployment rate is based on the number of workers in the labor force, an increase in that total can cause the rate rise just because there are more people looking for work.

When people haven't been looking for work — often because they feel discouraged by long periods of unemployment — they're not included in the BLS' estimates. When they come off the sidelines and get back into the labor pool, that can cause the overall rate to go up slightly.

Until recently, wages have been an area of concern for economists. As the labor market tightens, you'd expect to see wages go up as employers compete for the dwindling supply of qualified job candidates. Hourly wages increased by 2.5 percent in December, which is about average for the past decade.

Economists expect to see rising wages continue largely thanks to minimum wages increases in 21 states, many of which took effect at the beginning of January.

The civilian labor force rose by 806,000 in February. The labor force participation

rate increased by 0.3 percentage point over the month to 63.0 percent but changed

little over the year.

In February, total employment, as measured by the household survey, rose by 785,000.

The employment-population ratio increased by 0.3 percentage point to 60.4 percent

in February, following 4 months of little change.

In February, average hourly earnings for all employees on private nonfarm payrolls

rose by 4 cents to $26.75, following a 7-cent gain in January. Over the year,

average hourly earnings have increased by 68 cents, or 2.6 percent. Average hourly

earnings of private-sector production and nonsupervisory employees increased by 6

cents to $22.40 in February. (See tables B-3 and B-8.) 

The change in total nonfarm payroll employment for December was revised up from

+160,000 to +175,000, and the change for January was revised up from +200,000 to

+239,000. With these revisions, employment gains in December and January combined

were 54,000 more than previously reported. (Monthly revisions result from additional

reports received from businesses and government agencies since the last published

estimates and from the recalculation of seasonal factors.) After revisions, job

gains have averaged 242,000 over the last 3 months.