Stocks are flattish after the jobs report. Bonds and MBS are down.
Jobs report data dump:
- Nonfarm payrolls +242k
- Unemployment rate 4.9%
- Average hourly earnings -0.1%
- Labor force participation rate 62.9%
- Average weekly hours 34.4
Overall, an okay report: payrolls were better than expected, but hourly earnings disappoint. The increase in the labor force participation rate is a good thing to see. While it will depress wage growth at least initially, it will make for a stronger economy down the road. FWIW, there may be measurement issues regarding the wage measure that will supposedly be unwound in the next report.
Bonds sold off on the jobs report, with the 10 year and the 2 year bond yields up 3 basis points. I doubt this report will change any minds with regard to the March FOMC meeting, which most people seem to think will have no move in rates and hawkish language.
More evidence of wage inflation: Costco is upping the lower end of their wage scale from $11.50 to $13.00. They announced it on their earnings conference call last night. This will hit their earnings per share by about 1.3% over the next year. Competition for workers is becoming more intense as unemployment stays below 5%.