Happy Hour Starts Early!

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Total payrolls, including all non-farm employment, have inched steadily upward with private job creation leading the way.

The non-farms payroll report was a blowout all around, so just take the rest of the day off and start the weekend early. The number of jobs added in February was 313k, far higher than the 220K expectations. Additionally, January and December tallies were revised higher by 54K. The jobs added to the economy were broad based with 61K jobs added in construction, but strong numbers were also posted in professional services, retail and manufacturing. Yes, the manufacturing sector added 31K jobs last month even without tariffs. The labor participation rate finally showed improvement, ticking up from 62.7% to 63% as 800,000 of the roughly 95 million Americans not included in the civilian labor force came back. Not surprisingly, the headline unemployment remained unchanged at 4.1% because of this increase in the civilian labor force. Despite the low headline unemployment number, there is still slack in the labor market. But what made this report even more spectacular was the tepid 4 cent/hour monthly wage increase to bring YoY wage gains to 2.6%. If you recall, it was January’s jump in wages to 2.9% YoY (revised to 2.8%) which ignited inflation fears and sparked a selloff. This report is confirmation that the pro-business policies are unleashing economic growth and while investors are quick to price in all the potential negatives (Fed aggressive action, trade wars, geopolitical tensions), they may be remiss in pricing in the positives. A 3 percent GDP economy is looking more likely every day. The sometimes fickle equity market knew a winner when it saw it, and turned significantly positive on the release of this data. Bond yields also moved up – not because of inflation fears – but because of higher economic growth expectations. Please track the number of jobs added to the economy on
page 63 of the Global Perspectives Book.

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