Spreadex Market Update
Mixed non-farm jobs report leaves Dow struggling for direction, poses tricky situation for FOMC ahead of March’s meeting
Interestingly February’s jobs report contained almost exactly the opposite set of issues as presented by January’s data. Whilst the unemployment rate remained at an 8 year low of 4.9%, the headline non-farm employment change number of 242k (far exceeding the expected 195k and vastly outperforming last month’s upwards revised 172k) was countered by the wage growth figure, arguably the most important metric for the inflation-eyeing Fed, which fell into negative territory for the first time since the start of 2015.
Given the mixed nature of the data it is hard to tell whether the sharp decline in wage growth (from 0.5% to -0.1% month-on-month) will have significantly damaged the cause of the Federal Reserve’s hawks, or whether the robust non-farm figure is enough to compensate for the slip in the eyes of the central bank. Only time will tell; however, if you combine the first 2 non-farm reports of 2016 together you still get a fairly healthy jobs picture, even with each month’s failings taken into consideration. The Dow Jones found it just as difficult to discern the quality of the data this Friday; initially the index surged as the muscular non-farm figure was released, only to fall back into the red as the minutiae of the report was revealed, before settling into a fairly flat shade of green as the afternoon progressed.
Whilst the afternoon’s non-farm data served to muddy the rate-hike waters in the US, it couldn’t completely dispel Europe’s earlier gains. With Brent Crude sporadically teasing the $37.50 per barrel mark the FTSE remained steady, rising by 50 points on the strength of its commodity sector. The DAX and CAC, meanwhile, were slightly more impacted by the relatively negative reception that greeted the US figures, but still rose around 0.3% and 0.7% respectively.
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