The U.S. Non-Farm Payroll report was released on Friday and the numbers didn’t disappoint.
Total nonfarm payroll employment increased by 242,000 in February of 2016, higher than an upwardly revised 172,000 in the previous month and beating market expectations of 190,000. Employment gains occurred in health care and social assistance, retail trade, food services and private educational services, while the mining sector continued its downward trend. The U.S. jobless rate now stands at just 4.9%. Wages, however, fell by 0.1% month-on-month.
Non-Farm Payrolls in the United States is reported by the U.S. Bureau of Labor Statistics. The employment report is released monthly usually on the first Friday of every month, and has a strong effects on the US dollar, the bond market and the stock market.
The numbers are crunched by the Current Employment Statistics (CES) program of the U.S. Department of Labor Bureau of Labor Statistics that surveys about 141,000 businesses and government agencies, representing approximately 486,000 individual work sites and collects detailed industry data on employment, hours, and earnings of workers on nonfarm payrolls.
January’s figures have also been revised higher too, to show 172,000 new hires (up from 151k originally). However, in a separate report, data showed that the trade deficit widened to $45.7 billion in the same month below the $44 billion estimated, as a strong dollar and weak global demand helped push exports to a near six-year low.
Total nonfarm payroll employment increased by 242,000 in February…, higher than an upwardly revised 172,000 in the previous month.
Global Markets Up on Data
Stock markets worldwide edged higher as investor concerns about a weakening global economy eased on the payroll data, followed by encouraging data from major economies.
Wall Street closed higher on Thursday as the energy sector moved into positive territory for the year and crude prices rallied to near $36 a barrel. Futures showed the Dow up 77 pts, the S&P 9.5 pts and the Nasdaq higher by 27 pts.
The Standard & Poor’s 500 Index rose for a fourth day, climbing 0.3 percent to 1,999.99 at 4 p.m. in New York, capping a third week of gains, the best run this year. The benchmark closed above its average price during the past 100 days for the first time in 2016 and the highest since Jan. 5.
The Dow Jones Industrial Average added 62.87 points, or 0.4 percent, to 17,006.77, closing above 17,000 for the first time in eight weeks. The Nasdaq Composite Index increased 0.2 percent.
The news in the U.S. also helped market optimism in the U.K. driving shares in London to their highest closing level since the start of 2016. Mining stocks drove the market higher, helped by copper and iron ore prices touching their highest levels since last autumn. The FTSE 100 closed its Friday session up 69 points or 1.1% at 6,199, its highest close since New Year’s Eve.
U.S. Treasuries Hit High
The positive employment data drove investors to sell U.S. government debt Friday, sending the yield on the benchmark 10-year note to a one-month high of 1.883%, compared with 1.830% Thursday. The yield rose by about 0.12 percentage point for the week, the most on a weekly basis since November.
U.S. Treasury bonds remain attractive for investors overseas. Unconventional monetary policy adopted by the Bank of Japan and several central banks in Europe has sent more global government bonds to yield below zero and analysts say the rise in U.S. yields may attract fresh buying from money managers in Europe and Asia who continue to struggle to obtain bonds that offer both safety and income. U.S Treasury debt offers one of the highest yields in the developed world.
Investors expect the European Central Bank to announce fresh monetary stimulus from its monetary policy meeting March 10. Expectation of more policy easing has sent government bond yields toward record lows in recent weeks.
The next time Fed officials meet will be on March 15 and most traders are forecasting less than a one-in-10 chance the central bank will increase rates this month.