The Bureau of Labor Statistics reported better than expected jobs numbers for February of 227K, compared to expectations 210K. The tallies for January and December were revised upwards, belying expectations that last month’s strength was due to one-off seasonal factors.
The unemployment rate remained unchanged at 8.3%, despite an increase in the labor market participation rate. Average hourly earnings ticked up, while the average workweek remained unchanged, rounding out an overall very positive labor market report.
The strong February jobs numbers confirm beyond any doubt that the recent improving trend in the U.S. labor market is not due to some temporary seasonal factors, but rather a sign of things to come. This will not only strengthen the economy’s growth momentum through its knock-on effects on consumer confidence and household buying power, but could also play a positive role in helping prop up the housing ‘green shoots’.
With these numbers now in the open, investors will be trying to handicap the Fed’s courses of action and the odds of further quantitative easing. My view is that positive labor market momentum in a backdrop of high gasoline prices and an overall uncertain inflationary backdrop reduce the odds of further quantitative easing. There is simply no need for the Fed to come to the economy’s rescue when it can do just fine on its own.
Do you agree that today’s Jobs report lowers the odds of further QE from the Fed?
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