We talk repeatedly about the importance of job creation in sustaining a healthy economy, and the impact that the employment outlook has on the future of interest rates. Dissecting today’s Jobs Report shows that the unemployment rate jumped back up a notch from 4.7% to 4.8%. This is mainly driven by a decrease of 305,000 workers between the ages of 25-54 being employed. Interestingly enough, there was an increase of 195,000 workers over the age of 55 finding new jobs. The average rate of pay for all workers across the country rose three cents to $26.00 per hour. While for those of us with jobs, any increase in pay is welcome, the paltry raise actually decreased the average year-over-year gain by -0.4% to 2.5%. Both stocks and bonds are finding in comfort in the report and are showing positive earnings so far today.
Speaking of bonds and interest rates: the Fed met this week and unanimously voted to leave their rates unchanged. However, they noted that inflation is continuing to find footing across most monitored sectors, and let us know that a hike in March is not off the table. There is consequently about a 40% chance of a 0.25% increase in short-term interest rates coming next month.