US job growth for February came in a little ahead of expectations at +235,000, but after Wednesday's ADP data (which Paul blogged about over the last couple of days) was not a big surprise. Revisions to previous months data were not significant (although they can be and as seen above, the month to month changes can be erratic). Interestingly, if we look at the 12 month moving average which smooths out the month to month adjustments, the trend to weaker job growth since the beginning of 2015 has not reversed.
Behind the scenes, wage growth was not as strong as expected but is running at a rate of 2.8% year over year (after an upward revision to January's data).
The unemployment rate dipped to 4.7% and the participation rate increased slightly to 63%.
And following one of our recession indicators (when the current unemployment rate moves above the 3 year moving average), the gap between the two series of data remains at about the same level as last month (so recession is certainly not imminent at the moment):
If the US Federal Reserve is intent on pushing up rates by 1/4% on Wednesday (announcement at 2pm) as the odds are now over 90%, then there is nothing in this report to stop them.
In fact the odds of June and September rate increases (each by a 1/4%) are higher as well.
That, for the moment, appears to be flattening the yield curve (more detail on this next Tuesday at our weekly client webinar:http://highrockcapital.ca/current-edition-of-the-weekly-webinar.html.
In Canada, a big increase in full-time jobs (+105,000) and a loss of part-time (-90,000) netted a gain of 15,000 in February (most of that attributed to BC). Unemployment fell to 6.6% as the participation rate dipped. Wages in Canada grew at a meager 1.1% year over year and that is not inflationary and will keep the BOC on the sidelines: no rate increases on the horizon (variable rate borrowers can stay the course).
Scott Tomenson,CIM Managing Partner, Chief Investment Strategist