All eyes were on the jobs report on Friday as investors gauged whether any sign of weakness in the U.S. labor market would prompt the Fed to go easier on the interest rate hikes coming in the next two weeks. However, investors’ hopes of a softer-than-expected jobs report were dashed as the jobs report came in stronger than expected.
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Non-farm payrolls rose 311,000 in February while economists were anticipating nonfarm payrolls to increase to 225,000. The unemployment rate ticked higher at 3.6% in February while it was expected to remain unchanged from January. Average hourly earnings for employees on private nonfarm payrolls increased by 0.2% month-over-month to $33.09, lower than the estimates of a rise of 0.4%. Average hourly earnings inched up higher by 4.6% year-over-year which was again below the forecast of 4.8%.
Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are up 0.6%, 0.3%, and 0.07%, respectively, at 8:38 a.m. EST, March 10.
Fed Chair Jerome Powell had indicated earlier this week that the Fed may have to raise interest rates at a higher rate than expected after the recent economic data came in stronger-than-expected. However, Powell made it clear that the Fed has not decided on the size of the interest rate hikes.
Investors expect that the pace of interest rate hikes could be accelerated and according to a CNBC report, citing data from the CME FedWatch Tool, traders have priced in a 63% possibility of interest rates going up by 0.5% at the Fed’s next policy meeting.
While having more jobs is considered good for the economy a better-than-expected jobs report could signal more demand for workers indicating higher inflation.
