Categories U.S. Markets News

Upbeat labor market continues to fuel economic growth

Over the past few weeks, Americans have seen some encouraging data coming from the statistical department, though much of it was buried in controversies surrounding the government’s new import tariffs.

Economists have hailed the tax-cut legislation brought in by President Trump, for the positive effect it could have on employment and workers’ salaries. Meanwhile, it is feared that the import tariffs would reverse some of those gains if not implemented judiciously, as the response to the legislation from other nations is crucial for it to have the desired effect.

 

On the heels of Thursday’s feel-good report showing an increase in the overall net worth of households, the Bureau of Statistics on Friday said U.S employers added 313,000 new jobs last month, way beyond expectations.

Following the news, stock market futures registered strong growth, with the Dow shedding some of its earlier losses and opening nearly 200 points higher.

The good news is that job recruitment grew across the board and at the biggest rate in nearly two years. The rise in headline employment numbers, also known as non-farm payrolls, was led by the goods manufacturing sector, followed by construction.

Since it was an increase in labor force participation that led to the strong hiring, the unemployment rate remained unchanged for the fifth month in a row, at 4.1%.

But, there is some bad news too. Wages came in below economists’ expectations in February, and January’s ‘impressive’ wage numbers, which had set off a stock rally, were revised down.

The softness in the wage numbers has eased inflation fears and allayed fears of the Federal Reserve slashing the repo rate as aggressively as previously thought. The new Fed chief is expected to go for his first rake hike at the upcoming meeting later this month.

Moreover, strong employment growth in combination with flat wages is generally perceived as the sign of a balanced economy.

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