After a few months of bleak labor conditions, the U.S. jobs market saw a bit of warmth in February as the NFP figure came in stronger than expected. The report showed a 175,000 net gain in hiring for the month, outpacing the consensus of a 151,000 increase. On top of that, the January figure was revised from an initial reading of 113,000 to show a 129,000 rise in employment.
Components of the non-farm payrolls report revealed that the gains were spurred by a hiring rebound in the education and health industry, along with a faster pace of jobs growth in professional and business services.
Interestingly enough, the jobless rate ticked a notch higher from 6.6% to 6.7% in the same month. Apparently, the participation rate held steady at 63% despite the end of employment benefits for nearly 2 million Americans. The labor force actually grew by 264,000 in February, as more people decided to look for work again.
The latest jobs report did have its share of weaknesses though, as the average work week narrowed from 34.3 hours in January to 34.2 hours in February. Analysts chalked this up to poor weather conditions since the cold snap still affected several U.S. states during the month, causing millions of laborers to log in less than a full week of work during the survey period. In fact, the report showed that 601,000 Americans weren’t at work because of the heavy snowfall when the NFP surveys were conducted.
Despite a few weak spots here and there, some say that this report confirms that the U.S. labor market is starting to warm up again. Weather conditions are expected to improve in the coming months, which should lead to better hiring conditions. However, others insist that it’s too early to call this a recovery. After all, one data point doesn’t make a trend and for all we know, this might just be a small market correction.
What we do know is that the U.S. dollar’s reaction to the report was mostly positive, suggesting that the currency is still very sensitive to fundamentals these days. This goes to show that strong U.S. economic data can provide support for the Greenback in the near term, with Fed taper expectations still playing a role in forex price action. Given the rebound in hiring, traders seem more confident that the U.S. central bank is likely to carry on with its taper plans in the coming months.
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