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U.S. jobs data shows strong jobs growth, wages fall

(Reuters) - U.S. employment gains surged in February, the clearest sign yet of labor market strength that could further ease fears the economy was heading into recession and allow the Federal Reserve to gradually raise interest rates this year.

People enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York October 7, 2014. REUTERS/Shannon Stapleton

STORY: TABLE

KEY POINTS:

* Nonfarm payrolls increased by 242,000 jobs last month, the Labor Department said on Friday. The unemployment rate held at an eight-year low of 4.9 percent even as more people piled into the labor market.

* The economy added 30,000 more jobs in December and January than previously reported. The only blemish in the report was a three cent drop in average hourly earnings, but that was mostly because of a calendar quirk.

* Economists polled by Reuters had forecast employment increasing by 190,000 last month and the jobless rate holding steady.

COMMENTS:

VASSILI SEREBRIAKOV, CURRENCY STRATEGIST AT BNP PARIBAS IN NEW YORK:

“Concerns about U.S. growth and global growth have been mounting, and this report should ease those concerns. This eases concerns about the possibility of a recession, it suggests the U.S. economy is still growing, and it should help risk appetite, and should support the dollar against the yen and the euro.

“It should make markets more confident the economy is on track and the Fed will normalize eventually, but I don’t think this report suggests an immediate rate hike. Wages fell, which lessens the pressure on the Fed to react and hike rates at the upcoming meeting in March.”

PAUL CHRISTOPHER, HEAD MARKET STRATEGIST FOR WELLS FARGO INVESTMENT INSTITUTE IN ST. LOUIS:

“Pretty darn good number. I guess the only blemish is that wages number and I am looking for some sign there is something seasonal going on here, which could always be the case. But even so, if you look at earnings, the trend is still somewhat higher, even if it is maybe not as sharply higher as we previously thought. This is a sustainable for the time being, the market was already in a good mood coming into today. The question is whether the market can make a sustained rally, we think there are still some significant uncertainties out there waiting.

“It’s a sign that what we saw in the second half of last year was a period of softness, as we’ve seen before in this recovery, but not the beginning of a new recession. We’ve maintained all along the chances of a recession this year are very low so we are still in that camp.”

RUSSELL PRICE, SENIOR ECONOMIST, AMERIPRISE FINANCIAL SERVICES INC, TROY, MICHIGAN:

“It really shows the resilience of the American economy and the strength of its domestic side right now, primarily because of the consumer. That is still a very strong point that we should continue to expect to remain strong going forward this year.

“We had been expecting to see a greater impact from export activity, manufacturers and obviously oil and gas. Forecasters have been discounting too much the resiliency of the broader distribution of improvements that have been going on in the economy in general.”

GENNADIY GOLDBERG, INTEREST RATE STRATEGIST AT TD SECURITIES IN NEW YORK:

“Immediately clear that it’s a strong number with a strong headline, strong revisions and steady employment. Obviously the blemish is weaker job growth which can be explained by a statistical bias to underperform whenever the payroll period ends on a Friday. If anything, this should go a long way in reassuring markets that the U.S. isn’t headed towards a recession. Those odds have come down a bit since recent better data. This pretty much goes to support the fact the US economy continues to grow and the Fed can raise rates.”

BRIAN JACOBSEN, CHIEF PORTFOLIO STRATEGIST, WELLS FARGO FUNDS MANAGEMENT, MENOMONEE FALLS, WISCONSIN:

“There was something for everyone in this report. It was a nice headline number, but the quality of jobs added might not have been the greatest. There was a drop in the average hourly wage and hours worked. Labor market conditions are improving, but it’s really a mixed bag and should easily keep the Fed on pause. They’ll pause, but not stop, and the difference is important. I still think we could see a hike in June, but not before then.”

MARKET REACTION:

STOCKS: U.S. stock index futures roseBONDS: U.S. bond prices slipped, boosting yieldsFOREX: The dollar rallied against the euro and yen

Americas Economics and Markets Desk; +1-646 223-6300

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