STORY: TABLE
KEY POINTS:
* Nonfarm payrolls increased 215,000 last month, the Labor Department said on Friday. Data for January and February was revised slightly down to show 1,000 fewer jobs created than previously reported.
* Average hourly earnings increased seven cents. While the unemployment rate rose to 5.0 percent from an eight-year low of 4.9 percent, it was because more Americans continued to return to the labour force, a sign of confidence in the jobs market.
* The labour market has largely shrugged off slowing global economic growth, a robust U.S. dollar that has hurt manufacturing exports, and cheap oil prices, which have hit energy sector profitability.
COMMENTS:
LUKE BARTHOLOMEW, INVESTMENT MANAGER ON THE GLOBAL MACRO DESK AT ABERDEEN IN LONDON:
“It was a decent number, continues to show that the U.S. economy continues to motor on at a decent rate, but doesn’t really move the needle on a monetary policy perspective, particularly after the communication we had from Yellen recently. So I wouldn’t expect it to have a big impact on markets.
“The currency and bond markets haven’t really quite worked out what to make of it. I think it’s because there’s no reason to think what we’ve seen here fundamentally changes anyone’s or consensus view about how the economy was doing or what the outlook for monetary policy is. On that basis we’re in a bit of an ‘as we were’ situation.
“Most interesting things from this report, the way that the participation rate keeps ticking up, and obviously that’s why the unemployment number has gone up. It’s one of those few times where you can say the unemployment rate going up was good news. The big question is the extent to which that can tick up and whether there is there hidden slack hiding in the low participation rate and if that means that wages are going to continue to stagnate. If that’s all true then you might see that the Fed dials back even further from where it is at the moment. But having said all that, my best guess is that the Fed goes in June. I think it would take quite a significant deterioration in data the next couple of months to push them from that path.”
ALAN RUSKIN, GLOBAL CO-HEAD OF FOREIGN EXCHANGE RESEARCH, DEUTSCHE BANK, NEW YORK:
“There is not enough in the jobs report to change the dovish leanings of Janet Yellen and her desire to run the economy hot, and if anything the rise in (jobless, underemployment rates) makes the threat of tightening labour market capacity less pressing. Risk appetite should then have no problems with this data, and the inclination will be to run with recent negative U.S. dollar trades.”
SHAHAB JALINOOS, GLOBAL HEAD OF FX STRATEGY AT CREDIT SUISSE IN NEW YORK:
“It’s certainly not the kind of data that argues for the Fed to become even more dovish, and in that sense, it argues for the dollar’s losses to slow.
“The trend that was in place was a dollar weakness trend. We now have a number that argues against that trend persisting and in a sense argues that the market maybe needs a period of range trading now before it tries to work out what the next driver is going to be. “
ANNA RATHBUN, DIRECTOR OF RESEARCH FOR CBIZ RETIREMENT PLAN SERVICES IN CLEVELAND:
“Initial reaction: I was I was thrilled to see that we beat a lot of the expectations. Average hourly earnings, that also beat expectations. The prior number was also revised up in terms of the year-over-year number. That to us signals some wage pressure is present in the labour market and it also tells us that along with the labour force participation ratio ticking up – from 62.9 to 63 – that tells us that some of the slack in the labour market that Janet Yellen had been talking about, maybe not recently but for a while, that is starting to wane.
“You’ll see that the unemployment rate went up, from 4.9 to 5 percent, that number is meaningless at this point because first of all it is pretty low and secondly with the accompanying data, especially the labour force participation ratio going up, to us that is insignificant in terms of meaning.
“The data at home, whether it be labour market related or inflation related, the trajectory has been going toward a positive area. If you remember Yellen’s speech Tuesday as well as the decision from March 16 was very much global risk focused. So if things start heating up here it helps us withstand some of the risks that are coming from the rest of the world. Even if they are worried about global risk, it does raise the likelihood of the rates going up.”
BRIAN JACOBSEN, CHIEF PORTFOLIO STRATEGIST AT WELLS FARGO FUNDS MANAGEMENT IN MENOMONEE FALLS, WISCONSIN:
“The employment situation report was bittersweet. The headline payroll number was very good, as was the improvement in the labour force participation rate. The decline in durable goods manufacturing jobs and the move lower for the average manufacturing workweek were not positive signs.
"They highlight the labour market vulnerability that’s probably keeping Chair Yellen up at night. There is too great a risk to moving too quickly as the Fed doesn’t want the dollar to skyrocket, further damaging the manufacturing sector. The slight move up in the unemployment rate should ease the pressure to hike.”
MICHAEL ARONE, CHIEF INVESTMENT STRATEGIST, STATE STREET GLOBAL ADVISORS, BOSTON, MASSACHUSETTS:
“I’m not sure that the market is going to react too strongly to today’s number. The number itself, it’s a good employment report. It came in north of 200,000 about in line with expectations. So over all a very good report. It seems like Yellen’s speech at the Economic Club of New York took April clearly off the table, certainly we have a low expectation for a rate rise in June. I’m not sure the market is expecting this jobs report will have a major impact on the Fed’s decision, at least in the near term.
The unemployment rate “actually ticked up for good reason. The participation rate increased modestly, so that just means more people are coming back to the labour force and that’s a good sign. The participation rate ticked up, which is good news. More people are confident, they’re entering the workforce, more people are coming back. That’s great. As a result you saw a pick-up in the unemployment rate because of that. More people are competing for jobs, that’s what you’re seeing.”
DAVID CARTER, CHIEF INVESTMENT OFFICER AT LENOX WEALTH ADVISORS IN NEW YORK:
“This report suggests decent U.S. economic strength, and may provide a boost to corporate profits and riskier assets like equities. I think the strength of payrolls suggest the Fed will undoubtedly raise rates this year, likely in June.
“Unemployment edged up, but for good reasons—more people are entering the workforce.”
CURTIS LONG, CHIEF ECONOMIST, NATIONAL ASSOCIATION OF FEDERAL CREDIT UNIONS, WASHINGTON:
“It was another solid report. We continue to see the trend of people reentering into the workforce. As far as the Fed is concerned, it doesn’t change anything for them. A rate hike in April is pretty remote. More than two rate hikes this year is pretty unlikely. I think given what we heard this week from Yellen and we have seen 200,000 monthly gains for awhile now, their focus is elsewhere. We are seeing some weakness in some industries like the oil sector. Manufacturing is having another bad month. Everything is not clicking on all cylinders. Growth is strong enough to support the labour market. We are drawing nearer to full employment. We could see some slowing in the second half.”
MARKET REACTION:
STOCKS: U.S. stock index futures initially rose, but later added to lossesBONDS: U.S. bond prices were little changedFOREX: The dollar strengthened against the euro and yen
(Americas Economics and Markets Desk; +1-646 223-6300)
