Monday morning brings us the opportunity to look once again at what was a mixed United States Jobs Report.
Market participants can take what they like from what was patchy data, with both the doves and the hawks able to reinforce their positions to stick or increase the Fed Funds Rate from the current >0.50% target.
Improved wage inflation did surprise the markets, as it posted a substantial improvement, however the headline Non-Farm Payroll number was below expectations.
The report highlighted a divergence between the various sectors, which was most probably down to seasonal volatility.
If one was to average out the NFP numbers you are able to get a better idea of what the actual trend is, with the smoothed data being reported above the 200,000 level. The inevitable drop off in the unemployment rate to 4.9% is now approaching levels of full employment.
This is also helping to finally have an impact on wage inflation, which according to Fridays report has hit 0.5%, which translates to a very healthy 6.0% on an annualized basis.
The US dollar rose on the news as the markets shifted towards a more hawkish bias on interest rates.
Although there is still an unlikely chance of the United States Federal Reserve moving in March as the doves on the committee will be hard to budge, a continued improvement of the employment picture could realign the bias to a more hawkish stance if we also see an improvement in inflation data.
The US economy does show signs of resilience however, the overhang from the fall in commodity prices and the increasing concerns from the emerging markets and especially China could still derail the plans of the Federal Reserve to increase interest rates 4 times this year.