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Non-Farm Payrolls Crush Estimates, Private Payrolls at 12-Month High

Non-Farm Payrolls Crush Estimates, Private Payrolls at 12-Month High

The monthly Non-Farm Payrolls report for February was released Friday morning and the Bureau of Labor Statistics (BLS) reported that the labor market improved far better than expected in February.

In February, the U.S. economy added 236 thousand non-farm jobs, crushing estimates of a gain of 165 thousand jobs. Better, the most recent revisions to estimates by economists, a good indicator of the whisper number, averaged to about 185 thousand jobs added, showing the strength of this report.

Total Non-Farm Payrolls Month-over-Month Change

The BLS also reported that the unemployment rate fell in February to 7.7 percent from 7.9 percent on expectations of a reading of 7.9 percent. This drop was taken as a double edged sword: on one hand, payrolls grew reducing the number of those unemployed, however some unemployed persons continued to leave the work force, decreasing the labor force (the denominator in the unemployment rate equation).

Total Private Payrolls Month-over-Month Change

Further, private payrolls increased the most since February of 2012, rising 246 thousand jobs on expectations of a gain of 170 thousand jobs. Manufacturing jobs grew faster than expected in the past month and service sector jobs rose to a 4-month high.

There were some negatives in the report, mainly in the revisions. The January payrolls figure was revised sharply lower in the latest report from an initial estimate of 157 thousand jobs added to a mere 119 thousand. Also, the private payrolls figure for January was revised lower to 140 thousand from 166 thousand initially.

Equity markets globally popped on the news but have since given back gains on end-of-week profit taking. European shares as measured by the Euro Stoxx 50 Index rose as much as 1.6 percent before giving back some gains and now trades higher by about 1 percent. The S&P 500 Index rose 0.58 percent at the open but now trades only 0.23 percent higher.

Commodity markets also lacked enthusiasm about the data, with oil prices slipping in early New York trade. WTI oil fell 0.22 percent to $91.35 per barrel and Brent Crude fell 1.03 percent to $110.01. Gold futures rose 0.27 percent on further expectations that continued fiscal tightening will lead to future slower job growth and thus more monetary easing and cocoa notably outperformed in agricultural commodities.

The EUR/USD fell to a new 2013 low of 1.2964 before recovering to just shy of the 1.30 level and the USD/JPY gained to its highest since 2009 at 96.12. Notably, the USD/CHF rose 0.95 percent to 0.9516 as the dollar reigned across currencies following the stronger than expected report.


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