The US Non-Farm Payrolls report showed a whopping rise of 313K jobs in February, far better than 200K that had been expected. Moreover, the revisions for previous months added no less than 54K positions, a blockbuster rise in jobs. While the unemployment rate is still at 4.1%, this is due to a welcome rise in the participation rate.
However, the rise in jobs does not result in a wage rise. Average hourly earnings rose by only 0.1% and only 2.6%. This shows there are no inflationary pressures and the Fed will not be in a hurry. For stocks, this is a Goldilocks scenario: strong growth but no extra pay to workers and perhaps fewer rate hikes.
The Fed convenes in two weeks and now enters a blackout period in which it will remain silent. A rate hike is certain but the debate about three or four rate hikes in 2018 remains an open one.
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