Between Friday and today we have quite the economic “one-two” punch. On Friday the jobs report was released, and this report showed an increase of 275,000 jobs, which on the surface was stronger than expected. Going back one more month, in January we had an impressive number of jobs added and therefore the “adjustment” in this number was also a focus on Friday. The number of jobs added for January was adjusted downward by 124,000 jobs. Taken together, this means we have added 500,000 jobs in the first two months of the year, certainly a robust performance.
The unemployment rate came in at 3.9%, higher than expected, which is a sign that more Americans are entering/re-entering the market as opposed to job losses. Another focus was the increase in wages. The stronger the job market, the greater the potential for wage inflation. However, wages grew by only 0.1% from last month and were up 4.3% year-over-year. Wages have represented one of the “stickier” sectors of inflation and the Fed is watching these numbers very closely. The small monthly gain was good news.
Speaking of inflation, the second punch will be the Consumer Price Index, which will be released today. The Producer Price Index follows on Thursday. Together with jobs growth and wage inflation, the Fed has plenty of data to chew on when they meet next week. The markets have given up on the idea that the Fed might lower rates next week based upon the data we have seen thus far this year. Thus, as usual, the market analysts will be pouring over the statement released after the meeting to get a hint regarding when a rate decrease may be coming.
