The U.S. non-farm payroll, yet again, beat estimates on jobs growth: 235K vs an estimated growth of 196K (The ADP estimated a gain of 298K jobs) in February; and wage growth came at 2.8% in annual terms – in line with expectations although the month over month growth was a bit off with 0.2% growth vs. and estimate of 0.3% . Unemployment rate edged down to 4.7%. All these figures are still solid and clear the path for the FOMC to meet next week and decide to raise rates again by 25 bp.
The U6 unemployment measurement, a broader measure of unemployment, also declined last month to 9.2%. In terms of revisions, there was a total upward revision of 9K for January and December combined.
In February, the rate of U.S. unemployment was 0.2 percent points below the rate recorded in February 2015.
The number of unemployed persons (7.528 million) fell by 107K in February compared to the previous month. And the civilian labor force increased by 340K. In other words, the report showed a gain in number of people participating in the labor force and a fall in the number of unemployed – a good sign that people are still entering the labor market and the current monetary policy is still accommodating. In the end, the participation rate edged up to 63%.
Finally, wages rose in February compared to January – the hourly earnings reached $26.09 per hour — a gain of 6 cent or 0.2%, month over month – lower than expected (exp. were for 0.3% gain); wages grew at an annual rate of 2.8%, year on year.
The jobs report shows the labor market is nearing full employment especially if wages keep rising. On the other hand, some indicators do suggest the labor market still has more room to expand before the Fed should pull the breaks on its stimulating policy; this includes the still elevated U6, the high growth in jobs (in full employment this figure should be around 150K), and rise in participation rate. Nonetheless, the Fed is likely to move forward and raise rates again next week.
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