Summary for the 11th of March 2019


US nonfarm payrolls increased by 20 000 in February, disappointing the consensus. Last time the nonfarm payrolls increased this small was in May 2016 and September 2017. The market was expecting an increase by 180 000. In comparison, the nonfarm payrolls for January increased by 311 000.

The high volatility in these numbers were mostly due to the government shutdown. The shutdown was the longest in the US history, and 800 000 government workers lost their paycheck in January. Some of those 800 000 workers were covered by government benefits, specifically those who had been furloughed. Some federal employees also had to work without pay, and due to the length of the shutdown, many workers had to find temporarily jobs in January. This led to the non farm payrolls increased in January, and explained the numbers of 311 000. Once the shutdown was over, the workers quit their temporarily jobs, and non farm payroll in February declined sharply.

Non farm payroll -private sectors increased by 308 000 in January, and only 25 000 in February. Average employment for January and February in the private sector was 167 000, weaker than 12 months average. This indicates that employment has been affected by the political uncertainty.

The unemployment rate fell from 4% to 3.8% in February. This shows that the increase in unemployment rate in January was due to the government shutdown, not the weakening in the economics fundamentals. The real unemployment rate, which includes the marginally attached and discouraged workers fell to 7.3%, lowest value since 2001. The labor market is still tightening, because the economic growth is still strong.

Average hourly earnings increased by 3.4%, annually, strongest increase since April 2009. The hourly earnings have been increasing in the past year due to the tightening in the labor market.

As a whole, the employment numbers were positive, this will lead to the Federal Reserve to continue with the contractionary monetary policy. Though, at the moment, the market still expecting 0% of a rate hike this year.

Indices for 11th of March. Little changes in the US stock market on Friday due to weaker than expected employment numbers, the downward adjustment of the global growth and weaker than expected earnings from the energy sector. Expectation of additional economic measures from the Chinese government have lifted the Asian stock markets:

Dow: -0.8% (8th of March)
S&P 500: -0.2% (8th of March)
Nasdaq: -0.2%(8th of March)
Nikkei: +0.4%  (11th of March)
Chinese indices: +3% (11th of March)
STOXX Europe 600 Index: +0.78% (11th of March)

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