Based on the latest non-farm payrolls report, the US jobs market made a nice recovery in February, capping off two months of bleaker than expected hiring growth. The NFP report showed a 175,000 increase in net employment, stronger than the estimated 151,000 rise. However, the jobless rate increased from 6.6% to 6.7% during the month, indicating that a larger part of the current labor force is out of work
A closer look at the figures shows that the education and health sectors account for most of the gains in hiring, while business services also added to the increase in employment. Analysts remarked that the reason for the increase in the jobless rate was that more people are staying the labor force and continuing their job search, which explains why the participation rate held steady at 63% for the month.
The average work week shortened in February though, still an effect of the poor weather conditions. Roughly 6 million Americans were unable to come in for work during the survey week while several others failed to log in full working hours for the period.
Jobs and the US Economy
On a brighter note, the December 2013 and January 2014 jobs figures enjoyed upward revisions, indicating that the cold snap in several US states had a less negative impact than initially reported. This supports Fed Chairman Janet Yellen’s claim that the slowdown in hiring was just seasonal and it is likely to be corrected sooner or later.
Although the recent jobs report doesn’t necessarily put the Fed closer to hiking interest rates, it does ease market speculations that the US central bank will pause from its taper plan. Cautious market watchers thought that another bleak jobs reading for February might force the Fed to rethink its bond purchases reduction time frame and possibly add back some of its stimulus efforts if the jobs market doesn’t show any signs of a recovery.
For now though, the US dollar might stay supported in the coming months, thanks to the boost from US fundamentals and risk aversion in other markets.
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